Sterling's fall could batter UK's fish & chips

* Most cod and haddock eaten in UK is imported

* Buyers already warned to stock up ahead of price increases

* Salmon, squid prices jump due to weather conditions

By Martinne Geller

LONDON, July 10 (Reuters) - Prices of salmon and squid havesoared as disease and weather hurt global supplies, and Britishfish sellers say the Brexit-related drop in its currency may bethe next scourge.

The British pound has fallen to a 31-year low on fears aboutthe effect of the June 23 vote to leave the European Union,leaving it 13 percent weaker against the dollar.

That may make imports pricier, including the cod and haddockused by roughly 10,500 fish and chip shops in the 380 millionmeals they serve up each year.

Large retailers like Tesco and Asda havelong-term supply contracts and hedges that shield them fromnear-term volatility. But independent players -- which alsoinclude roughly 950 fishmongers, according to estimates byresearch firm Seafish -- are more exposed.

"We tried to buy some shellfish this morning ... and oursuppliers advised us to buy now because the price is going to goup," Gary Hooper, owner of GCH Fishmongers in Bedford, England,said. "If I had a big freezer I'd buy it now."

Hooper spends at least 3,000 pounds a week on fish,including bass and bream from Turkey and Greece, tuna from SriLanka and swordfish from Brazil. He reckons shellfish costscould rise 20 percent, but knows he would lose customers if hetried to pass that on.

"What we have to try and do is switch the consumer intolocal fish," he said.

The vast majority of the fish Britons eat is imported,mostly from Norway and Iceland, while much of the domestic catchis exported. Many UK fishermen hoped a Brexit would free themfrom EU fishing quotas, but the impact on the sector, which hasa large showing in pro-EU Scotland, is unclear.

FOREIGN FISH

Norway, the world's top salmon exporter, is benefiting fromsalmon prices that are 60 percent higher than a year ago, due todisease and a prevalence of sea lice in south America.

Supermarket chain Wm Morrisons raised its salmonfillet prices "months" ago, and Tesco followed suit recently,increasing the price of 2 fillets to 3.50 pounds from 3 pounds.

Martyn Boyers, chief executive of the fish market in thenorthern port town of Grimsby, says the pound's weakness, whichis also down about 10 percent against the Norwegian crown, couldreduce Britain's lure as a market, even for cod and haddock.

"In the end, if the Icelandics and Norwegians who send whitefish don't think the price they're getting is good enough, itwon't come here at all," Boyers said.

Britain is Norway's third-biggest market for seafood, worthseven percent of total sales in 2015, with a value of about 5billion Norwegian crowns ($591.90 million). Norway sells mostlysalmon to Britain (3.4 billion crowns), followed by cod (600million crowns) and haddock (450 million crowns).

"Those selling on the spot market will likely not see thecurrent pound value as attractive and look for otheralternatives," said Jack-Robert Moeller, director in Britain forthe Norwegian Seafood Council. "But regardless of whether yousell on the spot market or with long-term contracts, a weakeningpound will lead to higher import costs."

Fluctuating costs are par for the course at London'sbustling and wet Billingsgate Market in the shadows of CanaryWharf's skyscrapers. Sellers there said fresh fish prices moveevery day based on supply, which is heavily reliant on weather.

One merchant who imports more exotic fish like tilapia andcuttlefish, said he moved prices in line with currency, whileanother said he hadn't yet seen much change, as most frozenstock had arrived before the big drop or was priced in euros.

Prices for squid were a notable outlier, nearly doubling inthe last couple months as El Nino weather conditions reducedSouth American catches.

"Customers grumble for a while, but then get on with it,"said Paul Harris of Seahawk Marine Foods. "You still have toeat."

PASSING IT ON

Sainsbury's chief executive told Reuters thatsterling's fall would not necessarily mean higher prices forconsumers.

Fresh fish prices across the UK rose in each of the lastfive months, according to the British Retail Consortium, buckinga three-year trend of overall deflation due to lower commoditycosts and a retail price war as chains fight for fussy shoppers.

But it said retailers were hedged on currency for at leastsix to nine months.

"The time it takes for any price increases to make are-appearance will depend on a combination of factors includingthe future value of the pound, commodity prices and any eventualimpact of last week's Brexit vote," said Helen Dickinson, BRC'schief executive.

The National Farmers Union has predicted that higher pricesalong the supply chain would lead to increased domesticproduction. That could be good news for food makers like CharlieBigham, who tries to use as much British produce as possible inthe supermarket pre-cooked dinners bearing his name.

"Our preference is to source from the UK, but we're nevergoing to buy our Parmesan from the UK," Bigham said. His firm isnow in "lots of discussions" with suppliers about prices.

"One of the things we need to consider is whether we putsome price increases through to our retail partners. It'sobviously their choice ... whether they pass those on toconsumers."

($1 = 0.7723 pounds) (Additional reporting by Gwladys Fouche in Oslo and JamesDavey, Tom Bergin and Karin Strohecker in London; editing byAnna Willard)