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Analyst: Get ready for spike in fresh, frozen Atlantic cod prices

Which product forms stand to benefit -- or lose -- the most?

The 20 percent decline in the quota for Barents Sea cod will inevitably lead to a rise in prices, and historical data indicates upwards of a 15 percent rise, according to an analyst with Norwegian bank Nordea.

Historical Atlantic cod price trends

  • In 1979, a 17% quota reduction increased prices 10%
  • In 1980, a 16% quota decline pushed prices up 17%
  • A 20% decline in 2018 is expected to lift prices 15%

Source: Nordea

"There's no doubt 2017 will be a huge year for cod producers in terms of operating margins," Nordea's Finn-Arne Egeness told IntraFish sister publication Fiskeribladet.

"The quota decline, together with a weak Norwegian krone and increasing demand will make a big impact."

Egeness said he doesn't see prices returning to record 2007 levels, even with these factors.

"The quota decline isn't big enough to reach that level," he said.

In 2007, headed & gutted landed (H&G) cod prices reached an average of NOK 30 (€3.20/$3.60) per kilo.

The impact on prices from the quota cut is likely to have an immediate effect, and even with the lower harvest, Egeness expets a record cod value of over NOK 7 billion (€740.6 million/$829.5 million), up from NOK 6.45 billion (€682.4 million/$764.3 million) last year.

The trawl fleet will likely be the winners from the shift, he said.

It's not clear if all products will benefit equally. Fresh H&G is likely to see the biggest and most immediate jump in prices, which could turn buyers back to farmed salmon, which has been driving some volume sales to cod with its recent price rises.

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So far this year, fresh H&G cod has fetched and export price of around NOK 29 (€3.10/$3.40) per kilo, and Egeness said he can see export prices reaching NOK 32 (€3.40/$3.80) per kilo next year.

Nordea predicted salmon prices will be at around NOK 53 (€5.60/$6.30) on average in the second half of the year.

"That means a smaller price differential for cod and salmon," he said. "So we wonder what effect that will have on the market. Will people still buy cod, or will they go back to salmon?"

Next year will test the elasticity of consumers' willingness to pay for the product, Egeness said.

"This category has experienced huge growth in recent years, partly stimulated by low prices."

Frozen cod products may also be under pressure; other groundfish species such as Alaska pollock are currently suffering from low prices and could take over some market share.

Dried, salted and clipfish markets may also shift, with saithe potentially gaining some shares in markets such as Brazil.

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