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EU buyers hoping for cheap Alaska salmon might be disappointed

Strong demand and low inventories could offset lower prices from higher landings.

European buyers are embracing forecasts of higher wild Alaska salmon harvests this season, though the industry is still cautious on what might happen.

The Alaska Department of Fish and Game (ADF&G) projected 141.9 million pink salmon and 16.7 million chum salmon -- the primary products for frozen value-added production in the EU market -- a sharp rise for pinks and a stable volume for chum compared to last year. In Prince William Sound alone, the pink salmon run is expected to increase six-fold compared to 2016.

Demand in Europe is high and is expected to remain strong this season, which will put a brake on any free-fall in prices, but expectation is for some relief.

“We will not see cheap salmon this year, but prices will be lower than they were due to an increase in landings,” Sebastien Roussel, general manager at French trader Direct Ocean, told IntraFish.

Buyers in Europe are still cautious about forecasts, Rousell said, and there is still much uncertainty on how exactly prices will react.

“People in Alaska and Russia are saying that forecasts are not as reliable due to temperature changes; last year’s forecast for pink salmon was 90 million fish and we ended up with not even half the catches, only 39 million fish, so we need to wait and see,” Roussel said.

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Frank Zhou, managing director at Ocean One, told IntraFish frozen pink salmon prices will likely go down to around $1.30 (€1.20) to $1.35 (€1.30) per pound, even though salmon suppliers are cautioning against overly low expectations.

“In Alaska they’re saying that fishermen’s wages are too high this year, and that prices will stay strong, but I don’t think that’s true," Zhou said. "It may just be a case they’re building to keep prices up."

Forecasts for chum salmon harvests are quite stable compared with last year, he said. In Prince William Sound and Copper River, forecasts for this species are expected to decrease by 2 percent, to 2.16 million fish.

“If you look at catches of chum salmon over the past seasons, they are very much stable, and demand will remain as is so I don’t expect big changes here,” Zhou said.

Rebecca Wilson, a representative for the Alaska Seafood Marketing Institute (ASMI) in Northern Europe, said prices may remain stable for a number of reasons, including the reduction in farmed salmon supply and a continuously increasing demand for fresh and frozen fillets on the domestic market.

In addition, the low inventories of pink salmon from last season will also help maintain prices at similar levels.

“The extraordinarily weak 2016 harvest of pink salmon, which resulted in a significantly reduced supply, will support stronger prices in 2017 for the species,” Wilson told IntraFish.

According to her, demand of wild chilled salmon in Europe is increasing by 48 percent a year while overall chilled salmon is only growing at 0.9 percent.

“Wild chilled salmon now equates to 4.4 percent of the total chilled salmon sector, where it sat at around the 3 percent mark two years ago,” Wilson said.

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On the other hand, canned salmon sales continue to decline, Wilson said, with the main challenge being bringing new costumers to the sector.

Overall, low Alaska salmon harvests in 2016 led to a challenging year for the estate’s seafood industry.

“Northern Europe import statistics reflect this, and as a result [of the low landings] we saw a year-on-year deficit in volume of 19 percent, and a fall in value of 10 percent,” Wilson said.

“We foresee 2017 being a more fruitful year for the industry and expect these figures to stabilize.”

Frozen sockeye prices to increase significantly

This high demand is particularly noticeable in the sockeye market. Interest from smoking houses across Europe is stalling due to the ongoing high prices of farmed Atlantic salmon -- which led to scarce frozen inventories of the wild species in Europe despite the good landings last year.

The ADF&G forecast a decline in landings of sockeye in Bristol Bay this year, suggesting a total harvest of 27.47 million fish in the area, more than 26 percent below last year's preliminary projections.

"This is significantly less, and demand in Europe is high; we are experiencing very strong interest from all the major smokehouses in Europe, and from MAP processors,” Johan Brouwer, sales director at Maruha Nichiro-owned Seafood Connection, told IntraFish, noting sockeye's deep red color is resonating with consumers.

The higher demand and lower availability is expected to drive sockeye prices 4lb-6lb weigh class into the neighborhood of $3.90 (€3.60) to $4 (€3.70) per pound.

“Last season, prices were about $3.25 (€3) per pound so it is an important increase,” Brouwer said.

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