Prices
The first six months of 2011 were characterised by high farmed salmon prices. Producers made tremendous margins, at times close to 50 per cent, while processors, smokehouses, retailers and users of salmon as raw material for value-added products saw losses grow as they were not able to pass on the full price increases to customers. Since then prices collapsed. In fact, prices started weakening immediately after the Brussels show in early May.
It is difficult to point to any single factor behind the sudden price drop. The return of Chilean product onto world markets after the crisis in 2009 and 2010 had been anticipated but the volumes have not been higher than expected. More unexpected is the later weakening of the Brazilian market with Chilean producers again targeting traditional customers in the US and Japan. Plentiful catches of wild Pacific salmon supplied to US and Russian domestic markets contributed to weaker prices and also to slightly lower import volumes there.
It is clear that the exceptionally high prices during 2010 and the first five months of 2011 caused much resentment and fatigue on the buying side. In combination with negative exogenous factors on the demand side, in particular falling consumer confidence in most important salmon markets, all these factors influenced the market psychology to change to such an extent that prices started falling.
It is possible that some long-term structural changes in the market are being seen, with frozen fillets playing a larger role. Generous harvests in Alaska and Russia have supplied China with available raw material for frozen fillets that are re-exported to Western markets. Although these do not compete directly with fresh Atlantic salmon, they do indeed create competitive pressure regarding prices and margins.
Chile
Chilean companies are targeting their traditional markets of the USA and Japan, while exports this year to Latin American markets are less than in 2010. Shipments to Europe remain unchanged from 2010 but are still at very low levels. Because of high prices during the first six months period in 2011, unit values are much higher than last year and export values rose even more than volume growth. As a result, Chile’s exports are higher in value now than in 2009. The encouraging rise in smoked salmon and trout production and exports, from USD 32.3 million in 2009, 37 million in 2010 and 46.3 million in 2011, is noteworthy.
Norway
By September 2011, exports of Norwegian Salmon totalled NOK 21.7 billion. The volume of exports increased by four per cent or 23 000 tonnes, to 574,000 tonnes. In September 2011, exports of Norwegian Salmon decreased by NOK 404 million to NOK 2.4 billion. During the same time, volumes increased by 15 per cent to 11,000 tonnes. In Norway, good growth in the salmon biomass has increased quantities reaching market size.
During the reporting period January-June 2011 Norway’s total export volumes rose by a modest 1.5 per cent for salmon but dropped almost 24 per cent for trout. This fall in trout exports was caused by a lower amount of product available.
UK
The UK has a large domestic market but also substantial exports, most of which are shipped fresh. Given the lack of salmon in the US market in recent years because of the fall in Chile’s shipments, the US has become the UK’s largest market, followed by the traditional destination of France. The UK has benefited from Norway’s problems in China and have seen their exports of fresh salmon grow from nothing to 2,000 tonnes during the first six months of 2011.
Salmon markets
France: small growth in imports thanks to rising fillet imports from China. Russia: plentiful local harvests of Pacific salmon. US: slightly lower import volumes on higher prices. Japan: strong bounce in frozen salmon imports during 2011 as Chile returns in force
France
French consumption and imports of salmon rose during the first six months of 2011. The growth was minimal at 2.3 per cent, showing some resistance to the record high prices at the time. Processors in particular were hurt badly as they are locked in on long-term contracts to the supermarkets.
Fresh imports, although still dominating imports, are now declining; by seven per cent from the same period in 2010. In fact, Norway’s fresh whole salmon shipments to France fell back almost 10 per cent.
Fresh fillets, showed positive growth, but the big jump came in frozen fillet imports from China, probably for the most part pink and chums of Alaskan and Russian origin. In only two years, frozen fillets have risen by 46 per cent and are now 21 per cent of total import volumes, up from 16 per cent during the same period in 2009.
Russia
Russia reported strong catches of Pacific salmon, especially pinks during 2011. Much of this is exported to China for processing, and re-exports to western and Asian markets.
US
Alaska’s fisheries have also been abundant this year with supplies going both for domestic consumption as well as to Asia for reprocessing. US exports of frozen pinks to China during the first eight months doubled from 16,000 tonnes in the same period in 2010 to 32,000 tonnes this year.
Import volumes were slightly lower because of higher prices. Chile is back in the US market with fresh fillets in particular with 25,000 tonnes during the first eight months of 2011. The US market has also benefited from generous catches of domestic landings of Pacific salmon.
Japan
The comeback of Chilean production had a clear impact on the Japanese market with shipments up 26 per cent during the period. With fresh imports stable at 10,100 tonnes, this boosted overall Japanese salmon imports by 22 per cent during the period to reach 85,900 tonnes. Chile’s exports are all Pacific salmon and trout, whereas Norway’s shipments to Japan are all fresh Atlantics.
Outlook
From mid-2012, with new production coming to market from both Norway and Chile, prices could easily fall to very low levels.
April 2012