Potato stock remains (too) large in Europe

It is estimated that many French fries potatoes are still in storage, especially in Belgium, France and Germany. Stock figures are usually weeks out of date before publication, making the exact situation guesswork. Despite the wide availability of potatoes, many growers are unwilling to do business. The current market mood and price levels reinforce this feeling.

Significantly lower processing
Figures from the French organization for potato workers GIPT show that 1 tons of French fries potatoes have been processed in the country until March 750.000. Much less than has been the case in recent years. Compared to last season, the volume is 95.000 tons lower. This concerns 80% contract potatoes. Factories have only purchased a minimum of free potatoes. This is also visible in the import figures. While many potatoes are normally purchased in Belgium, that is not the case this season. Imports have decreased by 32.000 tons compared to the 2019-2020 season.

The French potato stock is bulldozing ahead of the market. On January 1, there was still 3,5 million tons in stock, of which 2,1 million tons were fries potatoes. An unprecedentedly large stock, which was even above the 2017 level. Given the processing figures, little has been done to empty the barns. The current market mood confirms this. After a price rebound at the end of February, the market has collapsed and there is hardly any more supply. Processors sit in a comfortable position. They have enough potatoes available. There is only demand for deliveries in May and June. Consignments that show defects in storage are taken to the forage.

Do figures paint the right picture?
In Germany the situation is comparable to France, although this cannot be said with great certainty. The figures that Destatis recently published relate to the position 13 weeks ago. It then turned out that the stock was slightly larger than last year and that there were more free potatoes in the barns. There are probably fewer fries potatoes in stock than the figures would lead you to believe. Yet here too, the relatively large stock remains a fact and there is hardly any demand for free product.

Belgian potato growers actually had fewer free potatoes in stock than average at the start of February. This has to do with the fact that tons of contracts had to be filled with free product due to disappointing yields last autumn. In addition, Belgian industry has performed relatively well despite the corona crisis and factories were indeed buyers of raw materials. The market has now turned around and loosened the reins.

No more than last year
If we compare the Dutch situation with regard to the potato supply with last year, there is not much to worry about. Last month an average amount of potatoes was delivered. The barns were not much fuller than a season earlier. Compared to the multi-year average, there are more potatoes. This also applies to the free stock, although an equal percentage has been sold.

In the Netherlands, factories were able to continue operating relatively well until the new year. This year a change is visible. Compared to last year, processing in February was 13% lower. Compared to January, fewer potatoes were also processed. Insiders indicate that sales of fries and other products are declining. The number of infections in Europe is rising and vaccination is not happening at the desired pace. Relaxation of the rules is not possible for the time being. This sector has also been affected by the blockage of the Suez Canal, which is causing congestion. Export destinations themselves throw up stumbling blocks, such as hesitant orders from Asia. Particularly from China. Insiders indicate that in the coming weeks some factories in Northwestern Europe will scale back processing and take time for maintenance, for example. Lines are shut down and that costs capacity.

Paws starts up
In the meantime, the first planting machines are in the field. This while contracting is still in full swing. Especially now that it appears that there is room for negotiation at the factories and there is some stunting here and there with seed potatoes. Those who have had the courage to wait a long time now sometimes receive a surcharge. Early potatoes can go into the ground easily. It is very quiet in Northern France, Belgium, and also on the clay in the Netherlands. The grounds are wet at the bottom and no one is in a hurry. Once the April 1 limit has been reached and the other spring jobs have been completed, planting can easily start. The structure is excellent and the soil is easy to work with.

The situation in most warehouses is under control. Low temperatures help with this. Apart from a few people in their twenties, it will not warm up very much until Easter and beyond. A single problem batch is quickly delivered to the forage. Baking color in particular plays a role. More and more often parties emerge that perform poorly. Sometimes due to the cold period and sometimes due to the incorrect use of new sprout inhibitors. After the new harvest is in the ground, it must become clear which direction the market will take. Week 17, in which the April contract on the potato futures market settles, is an important benchmark.

Is forage the big customer again?
If processing continues to slow down - due to less export and consumption within Europe - the situation will become particularly difficult for free potatoes. What destination will they have? Last year showed that the foraging market is capable of absorbing a lot of potatoes if the prices are right. This is the solution, especially in the Netherlands, Belgium and Germany. In France, livestock farmers pay €4 per 100 kilos for feed potatoes, while processors remain €1 above that. This puts a bottom in the market. The situation is not completely comparable to 2020. Last year - with the exception of the east - sufficient grass was harvested and the corn harvest was also okay. In addition, dairy farmers have poor returns. Purchasing feed thus becomes less interesting.