Salmon Market Update
After yet another increase in salmon prices this past Monday, many people are wondering what is causing such significant price increases and how long will it last. There are many factors playing a role in these prices, and they could be here to stay for quite a while.
As expected, the outlook for Chile’s 2022 production was going to be much less than in years past, but they are not delivering on what they expected. In response to this, many have turned to Norway to fill the void left by Chile’s limited production. And in addition, Canada is running into supply shortages putting even more stress on Norway. Norwegian harvesters cannot keep up with the increased demand, and on top of that, the total biomass is down 7% compared to this time last year. In the Easter week alone, the overall salmon supply was down 60% from the year before, causing the price to unexpectedly rise after Easter when it normally sees relief. Prices now are nearly 20% higher than normal compared to 2018, 19, and 20.
These high prices could be here to stay for a while, with demand staying high coupled with limited supply growth. Chile and other producing countries will not see increases in stocking until at least 2024, and land-based farms will not be able to fill in that extra production needed to fill the demand.
This extra supply needed may not catch up to the demand for another 2 years, with food service re-opening and retail sales seeing large increases as a result of more people experimenting with cooking at home. Now Mother’s Day is right around the corner, and with it comes one of the biggest salmon weeks of the year, and prices remain at record highs along with freight costs.
Processors have no choice but to pass these price increases along to customers because unfortunately, it’s the only way to make it a sustainable industry for all parts of the chain. Buyers now are looking more towards supply security for the coming periods, and have inquired about locking in contracts moving forward, but given the current state of the market that is not even an option at this time. As the prices go up no one has seen any drop in demand, everyone keeps buying, and most can’t get enough.
Norway thinks that come mid-June, prices should start to come down when the supply is increasing, but at this rate, we just don’t know. This is a difficult situation for everyone in the salmon business, but everyone is in the same boat, we are doing our best to keep our prices as competitive as we can.