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There have been also been a few stories about demand destruction...

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bug1

6,633 Posts.

615

28/04/22

16:10

Post #: 61076573

Originally posted by dabozza: ↑
Thanks Bug.

So playing around with the numbers, you can clearly see that export numbers are much higher in past couple of years.. but right now, they are tapering off as we have finished the harvest season and yet to get into the growing season. In fact, exports won't significant start up again until August/September.

Volume (kg) 2017 2018 2019 2020 2021 2022 Weighted Average (ex 2022)
1 Jan 680,503 906,941 805,706 1,619,044 2,305,354 4,047,275 8%
2 Feb 309,579 262,385 102,782 618,385 1,219,218
3%
3 Mar 277,557 212,398 107,641 792,298 941,680
3%
4 Apr 294,015 150,641 137,545 1,021,658 829,643
3%
5 May 591,447 224,556 187,010 1,678,869 1,175,108
5%
6 Jun 938,044 277,314 324,368 1,500,196 1,734,516
6%
7 Jul 1,003,301 320,842 395,359 1,389,308 2,378,572
7%
8 Aug 938,839 760,555 498,573 1,989,893 2,783,872
9%
9 Sep 1,268,397 1,627,260 756,773 3,264,327 2,540,677
12%
10 Oct 1,537,345 1,344,806 1,241,730 2,875,141 3,096,148
13%
11 Nov 1,642,145 1,315,737 2,325,313 2,725,349 3,059,684
14%
12 Dec 2,643,397 1,930,217 3,335,259 3,218,655 3,998,714
19%
13 Total Export 12,124,569 9,333,652 10,218,059 22,693,123 26,063,186 4,047,275 100%

My supposition is that the peak prices we are seeing now is because *nobody* can meet the demand. Norway hasn't got to their harvest season yet, Chile production is down. Maybe just Fareroe islands with their all-year-round weather is suitable (bullish for BAKKA). Using just the China numbers as a proxy for all exports, you can see that China is around 50% (oops wrote 25%) of total exports, and the volume has dropped right off.

The inventories that we carried over from 2020 were exported, which is why those numbers of 22,000t in 2021 and 26,000t in 2022 were so much higher. However, the general trend is that our production has increased, and part of that is going to more exports. This is from ABARES forecast last year:

So to my mind, 75NOK as a base case remains about right - while historically it's been closer to 55NOK. And that 75NOK is the long term futures price from FishPool too. In terms of the sales mix, I reckon we should be exporting around 15,000t of the 40,000t we produce in the future. This is higher than the previous levels, and will help our margins as we shift more to wholesale and export. Not sure exactly, but my guess is that around half of the price increase has been eaten by higher input costs. So margins will be one to watch.
Expand
There have been also been a few stories about demand destruction from high prices, which is markets working as they should, and does support the supply side theory.

This story from 7th April says supply problems from Faroe islands as well, and that prices arent sustainable at 100NOK, since then they have been reported at 135NOK.
https://salmonbusiness.com/it-is-the-low-supply-that-is-the-reason/
https://salmonbusiness.com/new-salmon-price-explosion-surging-towards-e14-per-kilo/

I think we are experiencing a step change, no doubt price and costs will go up, they arent going back down (EDIT: to what they were), those with the best margins will be the biggest winners.

Last edited by bug1: 28/04/22

TGR Price at posting: $3.75 Sentiment: Buy Disclosure: Held

0 Great analysis

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