To say fish is important to the Japanese is an understatement. The country boasts one of the largest fish markets in the world and maintains a fishing fleet which accounts for nearly 15 per cent of the global catch.
In 2009, fishery production totaled 5.43m tonnes in 2009, according to the Japanese Statistics Bureau.
And yet now, the FT reports, the discovery of high radiation levels in the sea off the coast of Japan is beginning to threaten the entire industry. An industry which happens to have been in decline already.
Shares in fishing companies based as far away as Norway are already seeing the benefit on expectations that shortfalls will have to be compensated for elsewhere.
This for example was the reaction in the stock of Norway’s premier fishing company Marine Harvest:
But one market that has so far only seen a tepid reaction is that of salmon futures, as listed on the Fish Pool exchange in Norway.
Fish Pool is the only fish-derivative market of its kind in the world, says Simen Thorbeck, an exchange broker. It provides the opportunity to trade Atlantic Salmon futures which are cash settled against a synthetic spot index derived based on a delivery point in Oslo, Norway.
In 2010, the exchange traded some 100,000 tonnes of salmon worth a face value of some NOK3.4bn (£360m).
Its NOK spot index as well as its futures prices, meanwhile, are used as a reference for spot and future prices globally.
And this is the curiosity.
Salmon spot prices remain flat on the week, with no clear influence seen on forward prices either. These, he says, remain as backwardated in structure as they were before the crisis.
Of course, that’s not to suggest there won’t be an impact in the weeks or months to come.
Worth considering, for example, is the following comparison of salmon prices versus Marine Harvest stock from Fish Pool:
The two are arguably correlated.
What’s more, it’s also worth considering that while most of Fish Pool’s clients are currently trade-related — fisheries, smokeries, importers and exporters and such the like, all looking to hedge their business — there has in the last few months been a growing number of financial trading companies coming into the market, says Thorbeck.
These have even included Scandinavian pension funds looking to hedge out equity positions in fishing companies, as well as purely speculative entities.
Now, given the current situation in Japan alongside the moves in fish equities … we wonder if an even wider market could soon develop a taste for outright salmon positions?
Related links:
Disease sends salmon prices leaping – FT
Tokyo, the water effect – another day, another scare – FT Alphaville
Radiation Fears in Japan May Help Asia, Norway Fish Companies – Bloomberg