OSLO: With Norwegian salmon prices starting to climb, could this help to boost demand in the U.S. salmon industry?
The last few years have seen U.S. farmed salmon prices falling steadily. Lower prices were primarily driven by the increased export competition with farmed salmon from Norway and Chile, as a result of a strong U.S. dollar and additional supply available as a result of the Russian import bans. In December 2015, U.S. salmon prices fell to a 3-year low, down 12% year-over-year.
Salmon still remains the second-most consumed seafood in the U.S. with around 334,000 tonnes of salmon consumed per annum. The U.S. harvests its own farmed and wild salmon, producing respectively approximately 110,000 and 450,000 tonnes per year.
The combined production of salmon roughly doubles domestic consumption; however, the world likes American Salmon and the marketplace exports its production. Surprisingly, around two-thirds of the salmon consumed in the U.S. is imported.
Norway is the largest global producer and exporter of farmed salmon, with a yearly production of approximately 1.3 million tonnes and exports totalling over half of that. As a result, Norway salmon price movements influence global prices.
Salmon prices
In the first five months of 2015, Norwegian salmon prices were generally lower than the same period in 2014, but from May 2015 that changed, with prices climbing over 30% in a month by the end of December 2015, up 12% y-o-y. In Norwegian kroner (NOK) salmon prices are at a 20-year high.
Warmer seawater temperatures in 2014 and into early 2015 prompted salmon reproduction and thus increased supply, driving Norwegian salmon prices down. However, since June 2015 catch volumes have been below that of 2014, due to cooler sea temperatures slowing salmon growth rates and causing lower average fish weights at harvest. The result of this was lower salmon supply and an increase in Norwegian salmon prices.
Moreover, high export demand has contributed to the prices rise. Despite the Russian ban, which has lowered Norwegian Salmon shipments since August 2014, Norwegian salmon exports in 2015 have been encouraged by a weak NOK. As a result, Norway has managed to shift its surplus of salmon stocks to the E.U., U.S. and Asia.
If Norwegian salmon continues to climb this could represent a problem for U.S. salmon. U.S. salmon become increasingly competitive on the international market again and increased demand will result in higher prices.
