Plunging Global Salmon Biomass - Potential Supply Squeeze to Increase Global Prices

h/t to @bug1 that I think first started discussing this.. but I reckon it's worth it's own thread, as this is quite a substantial market factor now.

If you haven't heard, there has been a significant reduction in global salmon biomass. What that essentially means is, there is less fish to harvest in the future, smaller fish to harvest, and generally will squeeze supply with a 6-24month lag. It's worth looking at more detail for Norway and Chile, the two largest global exporters.

In Norway, it is being reported that their biomass in the last three months has fallen by ~12% from 735,000tonnes to 630,000tonnes (a decrease of 105,000 tonnes) as at 31 March 2021. It is not clear to me what is driving this beyond normal seasonal factors. For example, 2020 was a bumper year for Norweigen salmon and biomass peaked in January 2020 at around 840,000tonnes. What is clear from the market reports is that the premium salmon at 4-6kg is in shorter supply, and the reduction in biomass will continue to impact this, albeit with a lag but for many months.
https://salmonbusiness.com/chiles-salmon-biomass-plunges/

In Chile the situation is much more dire. Only today, it was reported by Aquabench that the Chilean salmon biomass is down 20.7% over the past 12 months to a net of 324,600tonnes as at 31 March 2021. Interestingly, biomass of over 4kg has been reduced by 45.9%. The reason for this is clear - it is algal blooms due to low oxygen levels, which usually arises when there is low rainfall and low river flows. In the Murray Darling Basin you see it quite frequently in peak summer during drought, particularly green-blue algal blooms. No doubt this is a La Nina thing, but I am not sure.
https://www.fishfarmermagazine.com/news/chilean-salmon-company-algae-losses-rise-to-4-4m/
https://www.intrafish.com/finance/chilean-salmon-farmer-camanchaca-struck-with-7-5-million-in-algal-bloom-losses/2-1-997488
https://www.intrafish.com/salmon/camanchaca-loses-500-000-salmon-in-new-algae-die-off/2-1-990449

Resultantly, global salmon prices have continued their increase (despite last week's one-off fall). In fact, the global salmon price to be released tomorrow evening AEST may even reach 70NOK for the 4-5KG or 5-6KG. Supposedly prices are fluctuating a fair bit, so hard to really know. But the trend will continue for some time in my opinion if the biomass remains depressed in Norway and Chile.
https://salmonbusiness.com/supply-shortage-fuels-price-hike/
https://www.fishfarmermagazine.com/news/salmon-prices-bounce-back-after-sharp-fall/

In terms of Tassal's biomass, this has definitely been it's strength in the past couple of years. They have been investing in expanding their biomass from ~4-4.5KG to ~5KG to improve their margins. Moreover, they have invested in the Well Boat, etc which enables them to continue to expand production. So this should enable them to react to the current situation quite well. Side note, this is about the level of biomass for Huon who have been expanding their ONP / at sea operations, and should also benefit quite well.


Finally, to put the current prices and trends in context, you can see this from Mark Ryans 1H21 report. Global prices are already creeping above the 5yr trend. While global prices have only a moderate impact on TGR, it's still a good medium term signal. I wrote elsewhere I suspect this could be NPAT accretive for 2H20 of around ~$10m if the price held up.