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Analyst: Prices will rise as Chilean production falls

Danske Bank analyst Knut Ivar Bakken expects an average salmon spot price of NOK 58 per kilo this year.
Danske Bank analyst Knut Ivar Bakken expects an average salmon spot price of NOK 58 per kilo this year.

Salmon prices will be much better this year, driven by lower production that will be seen mainly in the Chilean industry, a seafood analyst has forecast.

Knut Ivar Bakken, who works for Danske Bank, told Norway’s Seafood Days 2021 conference that the beginning of the year had been tough for salmon, as in recent months, but emphasised that he is optimistic about 2021.

“I think 2021 will be a good year for salmon farmers. You will likely still get weak prices early in the year, but in May we expect salmon prices to rise quite a bit again and we will see higher prices in the second half of the year,” said Bakken.

“On average, we have a salmon price of NOK 58 per kilo, an increase, reaching the same level we saw in 2017, 2018 and 2019.”

Lower growth

One of the reasons he believes this is that Danske Bank expects the industry will this year have the second-lowest growth seen in the last ten years. Overall, Bakken estimated that there will be a 1.7% expansion in world harvest volumes.

Norway and Chile are the two main dominant producing countries.

“Chile had tremendous growth in 2020, which will change considerably in the future,” said Bakken.

“If you look at the biomass in Chile, it is down 9% compared to the same period in 2019, but there are a lot of big fish and a lot of them are ready to be harvested now. There has been high growth in Chile in 2020, which will continue in January and February of the current year, but we will see a significant drop in production in Chile in the second quarter of 2021.”

Healthier eating

Bakken also sees the tendency for people to want to eat more healthily as something that will help raise prices.

“The demand for salmon decreased due to Covid-19, but if we look at the value in the last years before the pandemic, it has increased by 6% annually and there is good growth in demand. 2020 dropped due to the coronavirus, and it is not the case that people no longer want to eat seafood. The underlying trend will likely continue in the future,” the analyst said.