Why would you short Tassals *now*?, page-582

That's about right, it's because of the northern hemisphere harvest season leading to excess supply.

The graph below from the 1H21 report shows what Mark Ryan was discussing in the earnings call - not just the seasonal factors, but also the yearly factors. We're just above the 5yr average at the moment, which is a nice place to be particularly as Q4 (April-June) is the greatest export period for Tassals.



I was reading through Bakkafrost materials last night, and they do really interesting market analysis in each of their quarterly and annual reports/presentations. Worth a look if you are wanting to see a Norwegian (actually they are Faroe Islands / Denmark) perspective on the global salmon / export markets. Below is an excerpt from their 4Q20 powerpoint with perhaps a better overview of the spot price.. what doesn't really show is the step-up in pricing that occurred from 2010-15 to 2015-20. While production costs are around 40-45NOK, prices have trended around 55-65NOK - pretty decent margins, and companies like Bakkafrost and Tassals that have been able to maintain increasing volumes and lower costs of production have done well.



Zooming in to 2016 when prices skyrocketed.. and even early 2020 before Covid .. the main reason for prices to go above ~65NOK is due to supply constraints. When something goes wrong (algal bloom in Chile? lice on fish in Norway? extreme water temperatures? ) then supply quickly drops off and price rapidly runs up. At the moment we have high inventories from pre-Covid which seems to be acting as a bit of a buffer, but supply is actually coming off. You'll see the relationship in the graph below clearly for 2016, but also early 2020:




This is a graph of supply, and you can see Bakkafrost (Faroe Islands) and Tassals (largest in Australia) - may not be the largest numbers, but are growing the fastest ex Chile. Chile seems to be in a world of pain at the moment, and forecasts are for -10% production in 2021. Norway has had a lot of lice recently, and so while their CAPEX has been quite high, it's been diverted to manage the sea lice and test out land based production so it hasn't shown up yet in volumes (+2% forecast for 2021).