The global salmon market is currently underpinned by a bullish current. According to one market expert, Norwegian salmon output growth is likely to be limited by colder-than-average water temperatures in H1 2023, which is a crucial growth period, in addition to low salmon biomass attributed to premature harvests that occurred in late-2022. Controversy regarding the Norwegian government’s imposition of a 40% tax on salmon farms provides another supply threat, given expectations that some players will be forced to exit the industry, thus lowering domestic capacity.
Supply concerns are further compounded by problems in Chile, the world’s second-largest producer, and a rival salmon exporter to the European market. Large outbreaks of salmonid rickettsial septicaemia (SRS) were recorded in Chilean farms in late-2022, which is expected to weigh on early season output, while the Chilean government has also placed limits on aquacultural capacity growth. This constrains the price-dampening potential for Chilean salmon exporters to fill any gaps in Norwegian volumes.
Indeed, the price of Norwegian salmon, as referenced by the Nasdaq exchange (Fish Pool Index, FPI) peaked at an all-time high of NOK 128.3/kg in mid-March 2023. This is partly attributed to currency movements, as the NOK weakened to a 25-month low against the EUR on 15th March, thus raising the price of EUR-denominated Norwegian salmon exports, converted into Norwegian currency. However, most observers do not foresee the relative strength of the EUR against the NOK as a foundation for robust salmon trade during Q2 2023. Instead, Norwegian exporters may look to alternative markets, such as North America and China. However, the war in Ukraine has also resulted in closed airspace over Russia and increased transport costs to Asian markets.
