W3 Salmon Update: Anticipated Growth in Global Farmed Salmon Industry in 2024 and Russia's Milestone Achievement

Comprehensive Outlook on Global Farmed Salmon Supply and Prices in 2024

Rabobank's analysis anticipates a gradual expansion in the global supply of farmed salmon during H1-24, marked by a compensatory surge in production from Norway offsetting reduced output in Chile. Despite an expected 9% contraction in Chilean supply during the first quarter and a 5% reduction in the second quarter compared to the corresponding periods in 2023, a subsequent improvement is projected in the latter half of the year, with supply levels forecasted to be 3% and 1% lower than the same period last year. Factors such as algal blooms and corrective measures taken in Chile contribute to the observed constraint in supply. Prices for fresh Chilean salmon filets have closely mirrored 2022 and 2023 levels, reaching USD 6.00 per pound in the United States (US) at the commencement of 2024, with an upward trajectory.

Estimates suggest a 1.9% year-on-year (YoY) growth in the global supply of farmed salmon for the entirety of 2024, underpinned by a nuanced trajectory of quarterly growth rates. Salmon production in all other producing regions should return to growth in the first half of 2024. Annual growth is expected to be 2% higher in Norway than in the first half of 2023, 5% in the UK, 4% in Canada, 34% in the Faroe Islands and 12% elsewhere.

The ongoing supply constraints are also reflected in prices, the Fish Pool Index prices in the first half of 2024 is expected to be marginally lower than the corresponding period in the previous year, within the range of USD 9.1- 11.5 per kilogram (kg) ( NOK 95-120/kg). This forecast underscores the resilience of salmon prices amid supply challenges. The biomass in Norwegian oceans, slightly lower at the end of 2023 compared to the previous year, is expected to rebound. The key driver for production in Norway in the first half of 2024 is the projected recovery of harvest weights, which were notably lower throughout 2023, particularly in the initial half of the year. Rabobank, along with Fearnley Securities, holds an optimistic view on the salmon farming industry for 2024, envisioning sustained high spot prices and stable costs contributing to favorable profit margins.

Fearnley Securities highlights expectations of accelerated global supply growth, with Norway set to recover from a 1%-2% production decline in 2022/23 and an overall YoY supply growth of 4-5% anticipated in 2024. The brokerage firm's estimates for the Nasdaq Salmon Index in 2024/25 align with this positive outlook, forecasting it to register at USD 9.1/kg (NOK 95 and EUR 8.2). The estimates encompass potential challenges, including a 1% YoY decline in Chilean salmon production in 2024, with El Niño-induced algal blooms posing a downside risk to this projection. As of the end of November, biomass in Norway is estimated to experience annual growth of 2%, while Chile's biomass is projected to decline by 2%. These factors collectively shape the trajectory of the global farmed salmon industry, with the first half of 2024 signifying the initiation of a new, albeit moderate, growth phase.

Russia Accomplishes a 30-Year Peak in Aquatic Resource Harvest at 5.3 mmt

In 2023, Russia achieved a remarkable milestone by exceeding a salmon catch volume of 600 thousand metric tons (mt). The confirmation came from Dmitry Patrushev, the head of the Russian Ministry of Agriculture, emphasizing Russia's ascent to the top position in the world in terms of salmon production. Additionally, 2023 marked a significant milestone with the attainment of the highest catch of aquatic biological resources in 30 years, totaling 5.3 million mt (mmt), as reported by the Ministry of Agriculture.

Ilya Shestakov, the head of Rosrybolovstvo, had previously anticipated the second-largest salmon catch in Russia's history, projecting approximately 600 thousand mt for 2023. Furthermore, Shestakov noted the potential for the overall fish catch to exceed 5.3 million mt by the end of 2023. This positive trend in Russia's fisheries industry aligns with broader agricultural achievements in the country during the stated period.