Norwegian salmon farmers including Marine Harvest ASA (MHG), Leroey Seafood Group ASA (LSG) and Salmar ASA (SALM) rose in Oslo trading on growing demand and tightening fish supplies.
Marine Harvest, the world’s biggest producer, climbed as much as 2.1 percent to a one-week high, while Leroey and Salmar advanced to the highest intraday levels in two weeks. All three beat the benchmark Oslo All-Share Index’s 0.5 percent gain.
“We expect the farming operations to report strong margins in the quarter,” Pareto Securities AS said in a note. Salmon prices in the first quarter averaged about 35 kroner ($6) a kilogram (2.2 pounds), 1 kroner higher than estimated, it said.
Salmon producers’ shares fell in 2011 as prices slumped 60 percent to 18 kroner a kilogram from April to October on rising output from Norway and Chile, the largest farmers. Production from Chile increased as farmers resumed supplies after the anemia virus sickened fish and ravaged its farms in 2007.
Prices have recovered to about 35.81 kroner, according to NOS Clearing prices compiled by Fish Pool ASA, a clearing house for financial contracts. They will average about 34 kroner this year and 35 kroner in 2014, Kolbjoern Giskeoedegaard, an analyst at Nordea Markets, said in a March 22 report.
A tightening of global supply is likely to support prices this year, said Henning Lund, a Pareto analyst. The broker expects 5 percent volume growth from Norway, less than the 7 percent to 8 percent growth in demand, while stricter regulation and a growing risk of disease in Chile means Pareto now expects a lack of growth in supply there this year, Lund wrote.
“Going forward we expect a tight supply balance, and the long-term outlook still looks very strong, and even stronger than before,” Lund said. Pareto raised its 2013 salmon price estimate to 33.6 kroner per kilogram from 32.75 kroner, Lund said. “We reiterate our buy recommendation on the sector.”
A recovery in prices is expected to continue in 2013 as supply growth levels off, creating a “much better” balance between supply and demand, Marine Harvest Chief Executive Officer Alf-Helge Aarskog said on Feb. 6. Demand in Europe including Russia is “exceptionally good” and the company is seeing a “positive trend” in the U.S., Mexico and Brazil.
Marine Harvest, 21.4 percent-owned by Norwegian billionaire John Fredriksen, gained 86 percent in the past 12 months, giving the company a market value of 20.5 billion kroner.
The salmon producer traded 0.9 percent higher at 5.465 kroner by 11:03 a.m. in Oslo. Leroey rose 1.3 percent to 157 kroner and Salmar 1 percent to 52.75 kroner.
To contact the reporter on this story: Alastair Reed in Oslo on at firstname.lastname@example.org
To contact the editor responsible for this story: Christian Wienberg at email@example.com