Farmed Atlantic salmon prices have been extremely high in Europe and Asia over the last three months, reaching record levels for the period. Prices also continue to increase across the Americas, confirmed Marine Harvest CEO Alf-Helge Aarskog. Looking ahead, he expects a “tight market” in 2017, with future prices for the next 12 months rising to EUR 7.40 (USD 8.19) per kg, up EUR 1 (USD 1.11) compared to the forward price in the previous quarter.
“I don’t think we have seen anything like it before,” said Aarskog.
Despite a drop in harvested volumes, the Norway-headquartered salmon producer posted its best ever quarterly operational earnings before interest and taxes (EBIT) of EUR 180 million (USD 199.6 million) in Q3 2016, up from EUR 78 million (USD 86.6 million) in the corresponding quarter of 2015, with Aarskog attributing the operational results to the record high prices.
The third-quarter is usually the quarter with the lowest salmon prices due to the higher volumes made available to the market, but in Q3 2016 there was an 8 percent drop in Marine Harvest’s harvest – largely due to sea lice challenges in Norway and Scotland – as well as very high demand for the product from “different markets,” said Aarskog.
Overall, the global farmed salmon supply in the last quarter fell by 7.7 percent or 40,400 metric tons (MT) year-on-year to 482,000 MT with the distributed volumes down 6.2 percent in the European market, 11.6 percent in the Americas and 2.3 percent in Asia.
With the shortage of fish in the market, prices were driven up between 40 and 60 percent, averaging EUR 6.41 (USD 7.10) per kg in Norway, USD 6.35 (EUR 5.74) in Chile and USD 6.94 (EUR 6.27) in North America. These prices were much higher than Marine Harvest foresaw, said CFO Ivan Vindheim.
In Q4 2016, the global supply will also be down around 8 percent year-on-year. For 2017, Marine Harvest expects the supply to increase at a modest level – between zero and 6 percent – with a best-case global production of just under 2.1 million MT, although Vindheim pointed out that the “likelihood would be lower” if the biological challenges seen in the main production areas continue.
Marine Harvest’s own production guidance for 2017 is 403,000 MT, up 6 percent.
