A similar trend is observed in coho salmon (-51 per cent up to November), and to a lesser extent, in trou (-21 per cent in the same period). Trout is consolidating its leading position after the ISA virus spread among Atlantic salmon, and currently accounts for nearly 40 per cent of all salmonid production. According to preliminary figures, total production of salmon and trout in 2010 totaled 287 500 tonnes, 22 per cent below total production in 2009.
As already mentioned in previous issues, the industry has gone through stringent transformations, which are expected to place it on the road to a sound recovery. However, the new structure has been criticized already by the coho salmon and trout producers as having higher production costs. Nevertheless, some companies are aiming to double production in 2011, while others consider the Chilean salmon sector as set for a longer term recovery, with higher production, and a recovery of profitability. Some forecasts, such as the one stated by representatives of the industry at the North Atlantic Seafood Forum, expect that the 2007 level of output will be reached by 2013.
Lower supply reflected in lower exports, while trade directions shift
The lower availability of raw material was reflected in a 20 per cent drop in exported volumes, totaling 297 200 tonnes of salmon and trout sold to foreign markets. It is important to note that trout has surpassed Atlantic salmon as the main exported species, accounting for 42 per cent of total volumes traded, and an even higher share in total exported value (44 per cent). Overall exports of salmon and trout fell 2 per cent in terms of value, totaling USD 2 061 million, following increases in average unit prices (of +21.5 per cent for Atlantic and Coho salmon, and of +19 per cent for trout).
Perhaps more noteworthy is the shift in the direction of trade. Japan is still the main destination both in volume and value, with 144 000 tonnes worth USD 909 million. However, Latin America is now placed second, above the US, in terms of quantity, with 50 640 tonnes against 45 200 tonnes. However, the situation is the opposite in terms of value, while US purchases fell 20 per cent to USD 448 million, 20 per cent growth in purchases from Latin America to USD 347 million was not enough to surpass the US market. Interestingly, Latin American demand is driven by Brazil, which represents 76 per cent of total trade in quantity. The region has become an important market for Chilean salmon, helped by strong economic performance, which is translated in a higher purchasing power. After Japan, Latin American markets showed a lower reduction in traded volume (-11 per cent). Another difference is that, while Japan is focused on trout and coho salmon, Brazil demands mainly Atlantic salmon. Some recent developments, such as the Free Trade Agreement signed with Nicaragua, indicate that the region is acquiring a position that it is likely to retain. In the meantime, import by the EU has fallen to 8 700 tonnes worth USD 72 million, which represents a marginal position in overall trade of salmon and trout during 2010, displaced by the consolidation of Latin America and the other main markets.
Demand seems not to be a problem for Chilean salmonids
Despite higher prices, demand for Chilean products does not seem to decrease. At the beginning of the year japanese consumption of fishery products was showing signs of recovery. However, the impact that the earthquake and following tsunami will have on demand in the Japanese market is still to be seen. In contrast, the Latin American region and other emerging economies are taking a leading role. This could imply that in the mid-term, as long as production recovers, pressure on prices could be higher, as the Chilean industry would have to supply the markets that it has managed to keep, as well as those that is has gained in the recent years.
Lower salmon imports in the US
Overall imports of salmon in the US in 2010 fell 3 per cent in volume totaling 234 000 tonnes, but given a 12 per cent increase in unit value, the value of imports totaled USD 1 822 million (+8 per cent). Imports of Atlantic salmon accounted for 75 per cent of total imported volumes and 78 per cent of total value, with 176 400 tonnes worth USD 1 439 million. The average unit value of Atlantic salmon imports grew 14 per cent in a year-on-year comparison.
The US Atlantic salmon market was dominated by three main players, Canada, Norway and Chile; however, each country focuses on different market niches. Canada accounted for 44 per cent of total Atlantic salmon imports, and supplied mainly fresh whole salmon (91 per cent of total sales to the US). Norway was placed second, with a 20 per cent share in terms of volume, focusing on the fillet market, with 66 per cent of exports to the US being frozen fillets, while 33 per cent were fresh fillets. As for Chile, the market trend is similar to that of Norway, although the focus on fresh fillets is more pronounced; 78 per cent of Chilean exports to the US were fresh fillets, while 16 per cent were frozen fillets. Recently, the Norwegian salmon industry announced its intention of resuming actions against the imposition of anti-dumping duties on whole salmon exports to the US, effective since 1991. This could help Norwegian producers regain market share in this segment.
In 2010, Norway was the top supplier in both the fresh and frozen Atlantic salmon fillets segments, with 41 per cent and 44 per cent shares respectively. Chile, once the main player in both segments, is now the second supplier of fresh fillets with a 39 per cent share, and the third supplier of frozen fillets with a 17 per cent share, after China (25 per cent).
Prices of fresh fillets showed significant increases from mid November 2010, and have remained stable from the beginning of 2011 until mid February, when they began to increase again. By mid-March quotations for Norwegian salmon were 20 per cent higher both for Norwegian and Chilean fresh fillets. Frozen fillets, on the contrary, have remained stable since prices showed a minor reduction at the beginning of the third quarter 2010.
Good outlook for domestic production
Recently, a fishermen’s cooperative from Alaska obtained Friend of the Sea certification for its king and coho salmon fisheries. The cooperative uses the trolling method, enabling each fish to be captured individually. According to Alaskan authorities, the outlook for the 2011 season is very good, as a result of a combination of favourable environmental conditions and the management measures adopted. It is forecast that 203 million fish will be caught this season. Captures of pink salmon are expected to grow 25 per cent to 133.7 million fish, while sockeye salmon captures are forecast to be 45 million fish (+11 per cent). Californian authorities also expect good salmon runs this year, and preliminary projections indicate that captures could grow as much as 200 per cent, from the 245 000 fish projected in 2010 to 729 000 fish.
Higher supply seems likely in the US market
The recovery of the Chilean industry, as well as the positive outlook for domestic salmon fisheries, indicates that supply of salmon to the US market could be higher in 2011. This, despite targeting different market segments, could ease the pressure on prices, which have shown an upward trend in the fresh fillets segment, while the whole fish markets have remained stable with a slight upward trend in some products. Currently, supplies are adequate for slow demand. This could drive prices down, which, in the mid-term, could see demand pick up.
EU Reduced production levels in 2010 caused a tight salmon market with high prices. Demand was good throughout the year in spite of some resistance from processors and consumers to the more expensive value-added products.
In 2011, despite the usual weekly fluctuations, Atlantic salmon prices have been remarkably stable during the first quarter, oscillating around NOK 40 CFA Oslo. The forward market expects Atlantic salmon prices to soften somewhat over the next quarter and then drop during the autumn and winter. Similarly, 2012 and 2013 forward prices (in NOK) are expected to be 23 per cent and 33 per cent lower than present levels.
The trout market remains undersupplied as Norwegian farmers give priority to salmon production and Chile’s producers are still much below historic production levels.
The leading producer and exporter of Atlantic salmon saw export volumes grow close to 10 per cent in 2010. Higher prices during the year led to a significant increase in values, up 33 per cent to NOK 30.5 Billion. Trout exports dropped 35 per cent in volume as producers switched to salmon because of the high prices. As a result, trout prices also strengthened during the year.
Norway’s exports of Atlantic salmon in January-March 2011 were 207 000 tonnes (round weight equivalents), slightly down (-3.1 per cent) from the same period in 2010. However, values were up 17.1 per cent to NOK 7.5 billion (EUR 1.0 billion) as a result of the higher prices.
Export volumes to the EU, Norway’s largest market with 65 per cent of sales, declined slightly (-3.6 per cent) during the quarter but volumes shipped to the US fell dramatically, from 13 700 in 2010 to 7 900 this year (-43 per cent). The reason for the latter is improved conditions in Chile with Chilean salmon exports to traditional markets increasing again, including to the USA.
The comeback of Chile in the US market is seen particularly in the fresh fillet market where Norway’s shipments dropped 58 per cent during the quarter. Norway’s fresh fillet exports to the Japanese market, however, showed a dramatic increase of 73 per cent.
Norway’s first quarter trout exports in 2011 were down in both value and volume. Average export prices rose 27 per cent. The main markets for Norway’s trout, Russia and Japan, were both weaker during the quarter, whereas trout shipments to the EU grew by a surprising 27 per cent.
Salmon export volumes from the UK rose a healthy 14 per cent in 2010. France, traditionally its main market for fresh exports, grew by 21 per cent but since 2009 has been overtaken by the US, which has seen imports from the UK and Norway bounce upwards as a result of the cut-back in Chile’s production.
Markets
EUThe EU is still growing in terms of salmon consumption although the high price for Atlantic salmon is forcing processors in particular to look for alternatives. This explains in part the strong growth in imports of frozen salmon products from China. Cost is also driving the outsourcing of the smoking industry to Poland and the Baltics. During the first quarter of 2011, Norway’s salmon exports to EU-27, although up in value by 17 per cent, fell back almost 4 per cent in volume.
France France, the largest market for salmon in the EU, grew by 4 per cent in volume in 2010. The fresh categories are showing the strongest growth, partly because of the decline in Chilean frozen salmon exports. Norway remains the principal supplier dominating the fresh whole (71 per cent) and fresh fillet (91 per cent) categories.
The rapid growth of China’s frozen fillets exports, which has now reached 40 per cent of imports, is significant. A large share of this is Pacific species rather than Atlantics.
In the smoked category, Poland dominates with 73 per cent of French imports. All other foreign suppliers, including Scotland, have seen their share diminish as a result. This is all the more remarkable as the share of Poland only a few years back was less than 5 per cent of the import market. French domestic smokers continue to target the top segments but are more affected by higher costs than foreign suppliers.
During the first quarter of 2011, Norway’s exports to the French market dropped.
German import volumes were flat in 2010 (+0.6 per cent) after a large increase in 2009 (+19 per cent). The German market is price sensitive and demand was held back by high prices throughout the year. Norway dominates overall followed by Poland, which has captured the smoked segment. China is also showing strong growth in the frozen category, reaching almost 18 000 tonnes last year.
During the first quarter of 2011, Germany’s imports from Norway fell back 4 per cent in volume.
Imports were flat in 2010 in both the fresh and frozen categories. Norway dominates the fresh Atlantic segment and Chile the frozen Pacific category. Imports from Chile were only slightly down from 2009 (-8.3 per cent), as Chilean producers continues to give priority to the Japanese market for its coho exports in particular.
Outlook
Chile’s salmon production is increasing but it is unclear how much will come to market this year. The production goals for 2012 and 2013 set by Chile’s salmon industry are ambitious but whether the rapid projected growth can be sustained long-term is still open to debate, both in Chile and in Europe. Prices will therefore remain high for most of the year and only weaken when additional supplies from Chile reach the market during the second half.
June 2011
