Is salmon no longer a safe haven on the stock exchange?

Aslak Berge

Salmon prices under heavy pressure are lowering the sector.

Seafood shares performed well in the first round of stock exchange race from the coronavirus. They were regarded by analysts as something of a safe haven, as share prices were nowhere near such hard-hit sectors such as oil, consumer goods and tourism which dropped sharply. A weakened Norwegian kroner, driven by oil collapse, offered a pleasant buffer.

Now, after the salmon price has depreciated by a third in a month and an increasing volume of salmon is frozen in, the tone has shifted.

Salmon price was clocked in at close to EUR 5 on Friday.

This happens at a time of year normally characterised by low harvest volumes and increasing demand before Easter. Demand shocks in the wake of the coronavirus crisis have sent salmon prices down to their lowest March quotes in five years.

This has, in turn, dragged salmon shares down.

Mowi’s stockpris in falling five per cent on Monday and has not been trading at lower prices since winter 2018.

Another big salmon farmer, SalMar, has seen its share price weaken by 17 per cent after the company decided to drop this year’s cash dividend.

Source: Infront

Lars Konrad Johnsen, an analyst at Carnegie, uneasily spelled out the rapidly falling salmon prices.

“Uncertainty is looming as the covid-19 pandemic is forcing countries in Europe and the US to take strict and effective measures to contain the outbreak. The negative effect for the fish farming space is impacting the underlying market with full force this week. With widespread shutdown across Europe and the US, we are now entering a price range where salmon is becoming highly competitive against lower quality protein sources (chicken, pork, beef). Still, limited swing capacity in the value-added segment is resulting in further pressure on prices despite surging retail demand. Beef, pork, chicken and eggs have been the big beneficiaries so far as the general seafood category lack the much more prominent retail presence and benefit to a limited degree from widespread adoption at fast food,” he wrote in a financial bulletin.


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