November 22, 2019

 

Norway's salmon farmers guiding for increased harvest volumes next year

 

 

Norway's salmon farmers are guiding for a 7.5% increase in harvest volumes in 2020 - somewhat higher than consensus expectations among analysts, said SpareBank 1 Markets' Tore Tonseth.

 

"As usual, they indicate somewhat higher growth...Representing close to 40% of the global production, expected harvest in 2020 sums up to 7.5% year-on-year – compared to Kontali at the 4%-mark and [SpareBank's] global supply estimate of 4.3%," Tonseth said.

 

Aggregated volume guidance was three percentage points higher than consensus last year as well, when actual 2019 volume is looking likely to come in just one point higher than consensus and two points lower than the aggregated guiding, he added.

 

Standing biomass as of the end of September 2019 was on track for 6.7% growth year-on-year, albeit due to higher average weights.

 

"For Norway, the listed farmers see around 9.1% growth next year, compared to [SpareBank] at 4%. It is primarily the north region where the listed farmers expect the highest growth rates, with [Norway Royal Salmon] North guiding 32% growth, Leroy North 21%, and Grieg Finnmark 19%."

 

Meanwhile, Tonseth noted the share price index for listed salmon players was down 7.4% driven both by Leroy Seafood Group's "weak numbers", but primarily the news of the US Department of Justice (DOJ) serving subpoenas to Mowi, SalMar, Leroy and Grieg Seafood over a price-fixing investigation.

 

"The loss in market value compared to the statutory maximum level of penalties seem excessive, and we argue this could be a trading buy opportunity with a backdrop of increasing salmon prices going into high season," the analyst wrote.

 

"Market whispers of the price next week indicate further increase, although early to determine."

 

Tonseth guided for spot prices of kr47-49 (US$5.14-5.36) per kilogramme for the current week -- week 47 -- down 5% week-on-week.

 

SpareBank wrote the US DOJ's statutory maximum penalty is $100 million, while the EU Commission's maximum penalty is 10% of total group revenue. For the four farmers in question, this combined maximum penalty comes to roughly kr10 billion (US$1.1 billion) in total, the bank said, stressing these figures were theoretical and uncertain.

 

- Undercurrent News