A look at the potato harvest to see wholesale potato prices effect.
For the second consecutive year, drought was a major issue, especially in the eastern part of Holland, the eastern part of Germany, Wallonia, the North of France and (outside the EU-5) the south of Poland.
When the main crop was ripened and farmers wanted to start harvesting for storage, the climatological circumstances changed completely, and the drought turned into very wet harvesting conditions.
Precipitation figures from Flevoland show a record precipitation total of 365 mm over the period from September to the end of November 2019, while the average precipitation total for these three months from 2010 to 2018 was 238 mm.
The result of the extraordinary wet harvest period is that a small percent of potatoes in the EU-5 are not yet harvested, around 3-4 % in Holland and about 11% not harvested in the UK.
The continuously wet circumstances, tough harvesting conditions and low soil temperatures resulted in a delayed / late harvest with some bruising damage to the potato crop.
Because the harvest was interrupted by rainy days, it took a long time to finish the harvest and to close storage: in order to start ventilating and drying the potatoes to homogenize the product temperatures in the storages. These far-from-optimal harvesting and storage conditions have resulted in some issues, like rotting potatoes. Some lots of potatoes that were meant for long term storage have already been shipped and processed.
Despite the drought during the growing season, it initially seemed that, due to an increased acreage over the last few years, the EU-5 potato production was going to at least meet, or even end up in a 'little bit beyond demand'.
Due to a not fully completed EU-5 potato harvest and the fear of more storage issues, we now estimate there will be 'just enough volume' with the possibility of a 'tight supply situation' towards the end of the season, depending on an early or late 2020 crop.
The initially 'balanced' daily wholesale potato prices and the April 2020 futures market price started to rise in the course of the last three months; the April futures market price increased from € 115,00 per ton in week 33 to € 180,00 in week 49.
In general, we conclude that the quality of the potatoes is in the range from average to good, the dry matter is lower than average, the tuber length is good, but varies a bit more than normal per variety.
There are storages with issues, but until now we think it can be managed.
The now known pros and cons are already reflected in the price.
The EU-5 free buy volume is limited. An eventual substantial export demand could have an impact on price developments in the coming months.
Once again, the 2020 'success potentials' are determined by the valorization of our raw material, good communication and smart entrepreneurship.
Situation North America:
Farmers in Idaho an Alberta harvested their latest potatoes with frost damage, while farmers in Manitoba, North Dakota and Minnesota did not succeed in harvesting all of their crop, due to snow, early and heavy frosts. The combination of an expanded processing capacity and crop losses leads to a tight North American supply situation. It is assumed that supplies can't meet the demand and it is expected that processors will have to buy additional volumes from the fresh/prepack market in order to reduce their shortages.