In a recent interview with Salmonexpert, Dag Sletmo, an analyst at DNB Financial Services, provided insights into the price dynamics of Chilean salmon for the years 2024 and 2025. According to Sletmo, the industry can expect robust prices due to limited supply growth driven by sustainability initiatives in key salmon producing countries.
Limited supply growth:
Sletmo highlighted the deliberate efforts by governments in major salmon producing countries to limit growth for sustainability reasons. This, he believes, will help keep supply in check, which will lead to stronger prices.
Challenges of technological change:
In addition to supply constraints, Sletmo pointed to the extended lead time required for the adoption of new technologies, both on land and in the marine environment. He expressed skepticism about the immediate impact of emerging technologies on global prices within the next decade, emphasizing that the next 20 years may tell a different story.
Norwegian salmon price outlook:
While the future price of Norwegian salmon on FishPool for 2024 is historically high at around NOK 100/kg, Sletmo noted a relatively modest increase of 5% compared to 2023. Despite the limited global supply growth forecasts, economic uncertainties and consumer challenges could influence the final price. Sletmo suggested a cautious estimate of around 90 NOK/kg.
Comparative analysis with Chilean prices:
In order to make the Norwegian price comparable with the main Chilean reference price for fillets in Miami, Sletmo performed a theoretical exercise involving conversions from gutted head-on to fillets, kilograms to pounds, and adjustments for currency and air freight. The result was a price of approximately USD 7/lb, slightly above current levels.
Considerations for companies:
While higher prices generally bode well for industry profitability, Sletmo emphasized that not all companies would automatically benefit. Structural differences in companies' cost structures and pricing strategies could affect their ability to take advantage of favorable market conditions.
Biological events and market dynamics:
Sletmo acknowledged the unpredictability of biological incidents in the industry. While these incidents can adversely impact companies, they often lead to higher market prices as lost volumes contribute to market scarcity. This market dynamic applies to salmon producers in Chile, Norway and other countries.
Dag Sletmo's analysis provides a good perspective on Atlantic salmon price trends, highlighting the complex interplay of supply management, technological transitions, and market dynamics.
Comments