Global Salmon Prices: Constrained Supply & Firm Retail Demand in 2023

January 4, 2023

2 mins read

A comparatively weak supply of farmed salmon was noted globally during most of 2022 and was a key contributor towards the record prices of H1 2022. The Norwegian salmon price (Fish Pool Index) peaked at NOK 125.0/kg on 27th April 2022, while FOB Chile reached an all-time high of USD 97.0/kg a few weeks later. These peaks coincided with an estimated 6% y-o-y dip in global supply during Jan-June 2022, alongside relatively steady demand, most notably from the retail segment, in addition to the more widespread trend of rising commodities prices. However, salmon prices partially corrected during H2 2022, with global supply recovering (estimated growth of 4% y-o-y during Jul-Dec 2022, according to Kontali). By late-December 2022, the respective prices of Norwegian and Chilean farmed salmon had fallen by 39% and 23% from the previous peaks.

Salmon-Jan-04-2023-12-42-33-9943-PMNotwithstanding, salmon prices ended 2022 substantially higher than the previous five-year average, and a growing bullishness is being felt across the market, with supply seen as the main constraint. Norway and Chile, jointly responsible for approximately 80% of global farmed salmon production, currently have limited technological capacity to increase output beyond 1-2% y-o-y in 2023, according to Rabobank. Indeed, global production fell by 0.2% y-o-y in 2022, having averaged 6.2% y-o-y growth since 2019. Moreover, if the Norwegian government enacts its proposal to add a 40% ground rate tax on farmed salmon profits in Q1 2023, in addition to the existing 22% corporate tax, it may constrain production further, and potentially prompt some farmers to exit the industry.

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Firm global salmon demand may also support prices, with most analysts expecting global consumption to increase by 2-4% y-o-y in 2023, despite the recessionary headwinds. A strong shift to retail consumption of value-added salmon products was observed in 2022 and helped to partially mitigate declining demand from restaurants and other foodservice vendors. Home consumption is expected to continue growing in 2023, in line with value-added salmon products increasingly seen on shelves and fish counters. This also aligns with the increasing popularity of ‘home cheffing’ and household dinner parties that emerged during the COVID-19 pandemic. Any rebound in the global macroeconomy may also support out-of-home consumption, although the Managing Director of the International Monetary Fund (IMF), on 2nd January 2023, said that this year will be “tougher than last year, with over a third of the world likely to be in recession. Thus, the retail channel is anticipated to absorb the bulk of global salmon output in 2023.

Topics: Fish & Seafood
Ibi Idoniboye
Ibi Idoniboye

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