Potato outlook isn't good

03/21/2014 03:10:00 PM
Chris Koger

Three main reasons account for the anticipated volatility in the fresh market:

  • an abrupt drop in export sales of processed potatoes;
  • contracts to supply processors — mostly of frozen french fries — were signed late this year; and
  • rotation and alternate crops do not look promising.

Wright said over the past six months, frozen french fry exports were up 2.5% over the previous season, when expectations were for 15% more. That is noteworthy, considering a 17% annual increase has been the norm in recent years. If that market, mostly China and Japan, doesn’t pick up again, expect some potatoes planted for french fries to spill over to the fresh market. The same goes for late contracts for the fryer market, Wright said.

With poor outlooks on corn, wheat and soybeans, they aren’t as attractive as planting potatoes for rotation or alternative crops, he said.

The reason production is expected to increase even if acreage is the same, Wright said, is because “trend-line yields” are expected to rise this season. During a typical season, yields across the board rise 1.5%, but the 2013-14 crop yields dropped by that amount. A 1.5% increase this season would add 4 million cwt.

Reds, yellows

One bright spot on the horizon, Wright said, is the incrased demand and production of red and yellow potatoes. Although they’re about 30% of the entire category, that’s changing, with the dominant brown russet losing ground.

“The real issue is that they’re growing so quickly it’s difficult to tell where the top is and how to match supply with demand,” he said. “Probably the biggest risk we have in those categories is if everybody jumps in and plants extra reds or yellows and we overwhelm the demand with excess supply and confuse ourselves about what the real demand is.”


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mda    
March, 24, 2014 at 12:07 PM

Mr. Wright is overlooking some of the details of the red market. This season, we have had the largest drop in average red price from start of harvest to present of any season in recent memory. With pressure on the market as it is now, we are concerned about market conditions of the 2014 crop. More red acres from the Russet growers will just make the red market that much worse!

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