After ignoring the United States for the most of this year, Norway apparently has rediscovered America as a market for its farmed salmon.
Some U.S. buyers and sellers say Norwegian salmon has been flooding the market since the beginning of October, and that prices for fillets from the Norway are now in line with fish coming from Chile and elsewhere.
“I would say in the last week or so, there’s been a deluge of offerings from Norwegian companies,” said a top executive from a U.S. seafood importer. “I’m not exactly sure why this is happening. It could be weak demand; maybe they’ve been holding out for price for so long that maybe all of a sudden they need to clean out pens. It could be anything.”
Norwegian production was expected to grow 10 percent this year, with most of that growth coming in the latter half of the year, said one U.S.-based executive of a Chilean salmon farming company. “They are looking at more market pressure, more supply pressure, to get the fish out,” he said.
Then again, based on recent export numbers, it wouldn’t take much of an increase to make it seem like Norwegian salmon was flooding the market.
Volumes of head-on whole fresh salmon from Norway to the United States were up in the first three months of 2011 — topping out at 255,716 pounds in March — before tailing off substantially. Head-on whole fresh volumes in August were 30,985 pounds.
For head-on whole frozen fish, U.S. volumes from Norway in August were 687,346 pounds — the most for any month this year, more than double the amount shipped in August 2010 but only 12 percent of total category exports. The organization hasn’t put out full numbers for September, but weekly reports for total worldwide shipments show exports of fresh and chilled salmon up 9.9 percent for the week ended Oct. 2 compared to the prior week, and up 3.5 percent for the week ended Oct. 9, to 16,079 metric tons.
Salmon exports to the United States in September were down 43 percent from September 2010, a Norway-based trade group said.
While Norway represented about 70 percent of the U.S. fresh fillet market after production in Chile was curtailed by infectious salmon anemia (ISA), this year it’s around 30 percent, said the Chilean company executive.
“Norway’s gotten very aggressive and is basically working at prices comparable to Chile’s,” he said.
Prices for 3- to 4-pound Norwegian fillets are down to around USD 4.35 a pound, USD 4.45 for 4- — 50 cents or more a pound below where they were, the importing company executive said. “We bring in fish from Norway from two different suppliers, and neither one of them had prices anywhere near where they could be competitive in this market,” he said.
The Chilean executive said prices are in the low-USD 4 range for trimmed-D, 2-3s, and a bit higher for 3-4s.
Since demand for salmon is “very elastic,” he said demand should start picking up now that prices have dropped. Asked whether suppliers from Chile and Canada would drop their prices in response, he said he doesn’t expect that to happen since prices are close to the “break-even” point.
“Retailers will have a lot more confidence than they did in the past to promote this, and they’ll pass those savings on to consumers, so we should start seeing demand pick up a little bit,” he said. “It really goes to the pricing. Norway still demands a little bit of a premium in the market, but we scratch our heads and say why does Norway deserve a premium? It’s really a perception issue. Customers are willing to pay 10, 15 cents a pound more, but when it gets much more than that...”
The seafood company exec said he’s taking a wait-and-see attitude toward Norwegian salmon, although he admits these current prices are making it very tempting. “Right now, because they have been out of the market, we’re going to assume it’s a blip until we hear otherwise, and we may hear otherwise, so we don’t rule anything out,” he said.
“We’re not sure because of our commitments, but it’s very attractive and there’s no reason to think we’re not going to consider it,” he continued. “Right now if you asked me, the answer is no, but if you ask me three hours from now, the answer might be, ‘eh, we’ll give it a try.’”
The increased volumes should carry on into next year, when the Chilean company executive says worldwide production is expected to grow another 30 percent. He expects Chile to be close to returning to full pre-ISA production by the second half of 2012, and says the industry needs to find new ways to sell all the fish that will be coming to market.
“I think there still needs to be development in the frozen markets … and more value-added products are going to need to come out,” he said. “We’re going to need to be a little more creative and innovative and not just hang our hat on commodity. We’re going to have to work very aggressively with our partners, whether it be retail or foodservice, to promote and grow demand.
“We’re likely to see people taking longer-term contracts. It’s a great opportunity to market prices and lock in volumes with suppliers that you trust.”
