Currency shock boosts salmon stocks

Aslak Berge

The depreciation of the Norwegian krone will affect share prices.

In line with the breakdown in the oil market, the Norwegian krone has depreciated radically against other currencies. Especially in opposition to the US dollar, which is valued exactly 12 kroner Thursday morning. Euro, which is the second important settlement currency for salmon, now stands at 13.03 against the Norwegian krone.

Read also:Oil price collapse hits norwegian krone

For the Norwegian salmon farmers, who export 97 percent of their products, a weak NOK is, all else equal, favourable.

The listed salmon farmers are also rising sharply on the Oslo Stock Exchange.

Market leader Mowi shoots up 16.8 percent. Lerøy Seafood Group is up 10.5 per cent. SalMar, which recently cancelled its €205m dividend, is up 13.1 percent.

However, a weak krone is not only positive, as the biggest input factor of fish farmers, feed, becomes more expensive.

Read also: Krone collapse: Now the salmon feed is much more expensive

“We cannot comment on feed prices for competition reasons. Currency conditions are handled in the customer contracts. It is the raw material prices that mainly determine the price of the fish feed, and the largest volume raw materials are priced in dollars and euros. When the krone depreciates, the cost of raw materials in Norwegian kroner becomes higher,” says Leif Kjetil Skjæveland, community contact in Skretting, to SalmonBusiness.

But sales revenue trumps feed costs, making the net positive. It lifts the salmon stocks.