A decline in consumer purchasing power and seasonal softness will likely conspire to bring farmed salmon prices down, but just how low remains to be seen in an uncertain economy, experts said.

Nordea Analyst Finn-Arne Egeness expects farmed salmon prices to drop over the coming months, due to both higher supply and the reduced purchasing power of consumers.

Salmon prices are normally at their lowest in August, so seasonally the price should fall from today's level anyway, he said.

"In the fall, I believe the salmon price will be between NOK 50 (€4.70/$5.3) to NOK 60 (€5.70/$6.30) a kilo," said Egeness during IntraFish and Fiskeribladet's webinar Sjomatpulsen in May.

Egeness pointed out that most of the salmon production growth this year will come in the third and fourth quarters.

"It may push the price down further, but there is no drama in what's happening in the salmon market yet," he said.

The reduced purchasing power of consumers as a result of the corona crisis is also having a negative impact, said Egeness.

A variety of opportunities

Bjorn-Erik Stabell, the Norwegian Seafood Council's (NSC) fisheries envoy to Spain, was more optimistic, especially for salmon, but also for other seafood products.

"I am convinced that salmon will benefit from this pandemic," he said at the webinar.

Stabell said salmon has become Spanish peoples' favorite at the fish counter.

Bjørn-Erik Stabell, Fisheries Envoy, Spain. Photo: Norges Sjømatråd

Stabell also drew parallels to the financial crisis of 2008.

When that happened, high unemployment and weakened purchasing power meant that more manufacturers of both food and other products began to sell smaller packages.

As a result, the price was lower, although the kilo price did not necessarily change significantly. The same thing can happen again, he said.

Both Egeness and Stabell also pointed out that the value chains are very adaptable, such as when Russia suddenly closed its borders in 2014.

Russia was among the largest markets for both Norwegian salmon and other fish species.

Big trade at Fish Pool

Meanwhile, at salmon commodities exchange Fish Pool, CEO Soren Martens reports strong activity.

"It seems that many in the industry have been awakened to what it means to have a Fish Pool contract rather than a supplier contract," Martens told IntraFish.

"The settlement is guaranteed by a bank, so we have seen a significant increase in turnover."

Søren Martens, CEO of Fish Pool. Photo: Fish Pool

Contracts are currently being traded by a large margin for the second half of 2020, at around NOK 51.50 (€4.80/$5.40) per kilo. For 2021, forward prices are at NOK 59.50 (€5.60/$6.30) per kilo. The current spot price is around NOK 60 (€5.70/$6.30) a kilo.

Although prices are expected to dip this fall, they are likely to be higher than at the same time last year.

"I don't quite understand why the spot price is as high as it is now, but at least many players see reason to secure prices of around NOK 50 (€4.70/$5.30) a kilo in the fall," said Martens.

There were very large price fluctuations in the summer and fall of 2019, Martens noted.

"In July 2019 we had a price of NOK 56.62 (€5.30/$6) a kilo, while in September it was at NOK 44.20 (€4.20/$4.70) a kilo," he said.

Fish Pool estimates a September contract price of NOK 48.40 (€4.60/$5.10) a kilo. Despite the coronavirus crisis and the highest unemployment rate in more than a century in many countries, the future price for September this year is higher than the actual price in the same month last year.

Of course, a weak krone is making a positive impact. Last year the September exchange rate against the euro was NOK 9.92 (€0.93/$1), while in the forward market it is now around NOK 10.89 (€1/$1.10).