May 8, 2018 / 5:34 AM / 2 months ago

UPDATE 2-Health-conscious consumers keep salmon price rally intact

* Consumers in China, elsewhere push up prices of salmon

* Fish stocks crimped by cold sea temperatures off Norway

* Volatile supply conditions hurt some producers in Q1 (Recasts to include results of Norway Royal Salmon and Leroey Seafood, adds details, context)

By Ole Petter Skonnord and Gwladys Fouche

OSLO, May 8 (Reuters) - Prices of salmon and other farmed fish are likely to remain high as rising demand from increasingly health-conscious consumers in China and elsewhere outpaces limited growth in supply, Norwegian producers said on Tuesday.

Salmon spot prices have surged from a low point of 51.90 Norwegian crowns ($6.40) per kilo in early January to close to 80 crowns per kilo, their highest level in 16 months.

As well as robust demand, prices have been lifted by slowing growth in supply as colder-than-usual sea temperatures off Norway meant the fish grew slower than normal and that harvested fish thus were smaller.

Norway is the world’s largest producer of farmed fish, ahead of Chile, and consumption has boomed in recent years as middle-class consumers from Europe to Asia seek healthier sources of protein for their diets.

“Demand is very strong and we don’t see that supply will grow by much this year,” Henning Beltestad, chief executive of leading Norwegian fish producer Leroey Seafood, told an earnings presentation on Tuesday after reporting a decline in first-quarter profit, blaming a lower harvest of fish.

“Now we are around 80 crowns per kilo this week. We think there will be big swings ahead, but the price level will lie at a relatively high level in the near term, “ said Beltestad.

Demand in China increased by 18 percent in January-March, he said, while in the European Union it rose by 7 percent. Meanwhile global supply of farmed fish is expected to grow by 3.7 percent this year against the 5 percent Leroey had forecast in February.

Peer Norway Royal Salmon also anticipated “good” demand ahead with low growth in supply, after reporting a 5.8 percent drop in first-quarter operating profit.

Slowing supply has made the market volatile for producers but Norway Royal Salmon said the outlook was positive despite the drop in operating profit.

“Together with good demand for salmon, this provides the basis for a continued positive market outlook for the industry,” the company said in a statement.

Fish farms, which raise salmon and rainbow trout, have grown from being a side activity for Norwegian fishermen two decades ago into the country’s second-largest exports after oil and gas, with sales of 64.7 billion Norwegian crowns ($7.99 bln) in 2017.

On Monday, Bakkafrost a producer in the Faroes said it expected a tight salmon market ahead as supply growth abates after reporting below-forecast first-quarter earnings.

Marine Harvest, the world’s largest fish farmer, will present its outlook on Wednesday after preliminary results on April 16 showed operating profit fell 31 percent from a year earlier, slightly below analysts’ forecasts and also hit by volatile supply conditions. ($1 = 8.1011 Norwegian crowns) (Editing by Susan Fenton)

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