Norway production drop would cause market ‘shockwaves’

November 22, 2012, 8:16 am

The Norwegian Seafood Federation is predicting a 12% drop in salmon production in 2013, which would send “shockwaves” through the market, said a banker from Nordea.

The Norwegian investment bank and the Norwegian Seafood Council held the Oslo Salmon Summit on Wednesday, to look at the dynamics of the market for next year.

In his summary of the event, Nordea’s senior analyst for seafood, Kolbjorn Giskeodegard, said a representative from the Norwegian Seafood Federation (FHL) presented some interesting figures on production.

“The FHL representative outlined a forecast of 1.26 million metric ton harvesting in Norway in 2012 and only 1.10 million tons in 2013,” said Giskeodegard.

“In that case, this is a dramatic 12% drop in harvesting, which should send shock waves into the salmon market,” he said.

However, Nordea does not totally agree with the 12% drop figure, tabling instead a flat growth rate.

“In our view, the 2012 estimate in substantially over estimated. As there is only six weeks left, it is in fact quite unrealistic to reach even 1.2 million metric tons. In our view 1.18 million metric tons both in 2012 and 2013 is much more realistic, hence a zero growth in harvesting in 2013,” he said.

“For Chile, we expect a growth of 80,000-100,000t compared to 2012, this is thus expected to be the only region with substantial growth next year,” he said. “All in all we expect a 3% global supply growth, down from the 22% expected in 2012 and there is no new information that is altering this view per now.”

‘All in all fairly optimistic’

The focus of the event was a tight supply situation in 2013, challenges in Chile and vast opportunities in both established and new markets for salmon.

“All in all fairly optimistic view on the situation the next 12-24 months, though underlining the challenges related to huge inventories in Chile heading for markets in Europe and Asia. We remain positive on the outlook for earnings in the industry after this seminar,” said Giskeodegard.

“The seminar confirming our view on next 12-month development. The overall conclusion from the seminar underlines our basis view for the next 12 months; no supply growth except from Chile and uncertainty to which extent the inventories of salmon in stock — and in sea — will influence on the 2013 prices in Europe,” he said.

“Our view is that increased supply from Chile will keep prices at ‘sustainable’ levels, still above NOK 30 per kilo, boosting earnings and hence share prices further from the current levels.”

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