Salmon prices keep rising, but Canada and Chile margins still under pressure

January 18, 2013, 1:46 pm

Fresh farmed salmon prices in Norway have risen to levels of NOK 36 ($6.46/€4.83) per kilo, FOB Oslo, said an update by Nordea analyst Kolbjorn Giskeodegard.

This is up from levels as high as NOK 33-34 in week 2, when the spot price on Fish Pool averaged NOK 32.42.

Harvesting has also dropped on lower sea temperatures, said the analyst.

In the US as well, fillet prices are continuing their increase, now up 25% from their lowest point of around $6.20 between week 43 and 46 last year.

Chile, Canada: 'Prices need to go up'

Chilean producers are still estimated to make a loss of $0.5 per kilo at current prices, but the gap between Chile's production costs and end price should narrow “week by week now”, said Giskeodegard.

According to Anders Milde Gjendemsjo, of Norne Securities, Chile has lower production costs than Norway (NOK 24-25/kilo), but higher transport costs. "Prices are too low, and with a deteriorating fish health perspective, prices need to go up," Gjendemsjo said.

Another Norwegian salmon analyst, who asked not to be quoted, said Chilean production costs are on par with Norway's, at around NOK 24 per kilo.

However, this average belies a wide variation, he said. In Norway, for instance, the difference between the worst and best performer is in the order of at least NOK 4 per kilo -- so ranging from less than NOK 22 to more than NOK 26.

Meanwhile in Canada, the cost of production is still much higher than in Norway and the Faroes, Gjendemsjo said.

Canadian costs are in the order of NOK 30 – NOK 32 per kilo, compared to NOK 24-25 for Norway, he said.

“That means that Canadian farmers need a price for 6-8 NOK/kg extra relative to Norwegian farmers," Gjendemsjo said. "Historically, the spread has sustained this, but currently it is not. So if the spread does not increase again, Canadian farmers will continue to be loss making. And if the businesses are to be sustained, you have to be profitable.”

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