A combination of reduced production and increased demand is decreasing the French fries stocks of North American producers. So much so that the cold stores were not so empty in May in 5 years. This makes the transition between the old and new harvest extra exciting.
Potato processors in the United States started the month of May with a stock of fries of more than half a million tons. Enough to last exactly 1 month. That is almost 4 days less than the 5-year average. In one month, stocks have fallen by 6,5%. Not since 2016 have there been so few fries in the country.
Ordinary life
A combination of less processed product and more end product sold has ensured that the figures have fallen sharply in one month. This concerns almost 350.000 tons of end product that disappeared from the cold stores during April. In North America, normal life is increasingly starting to return. The number of corona vaccinations is increasing rapidly, the rules are relaxing and events are allowed again. Last Sunday, the world-famous Indy 500 race was held again with 135.000 visitors. The hospitality industry in the US has also performed well during the corona pandemic. Mainly because of the focus on home delivery, which is much more normal than in Europe.
A multi-year trend is visible in the figures, with chip manufacturers maintaining increasingly tight stocks. This effect has now been strengthened because the cold stores have been replenished less due to lower potato processing. Had it performed at its average capacity, the figures would have been different.
Possible shortage
The question now is whether potato processors can increase their production in May and June to build up stocks. If they don't, they will end the old processing season with a very thin margin. If we calculate the current processing level towards the end of the season, this means that the year closes on June 30 with a residual stock of more than 26.000 tons. The 5-year average on this date is 69.000 tonnes, which shows just how tight the situation is. The average sales level in the summer months is 30.000 tons of fries. If this scenario plays out like this, then there is a shortage.
Processors produce in anticipation of a possible shortage. Firstly, by increasing the prices of fries, which reduces demand. In addition, not all orders placed can be filled. This is especially the case for the export market, from which European processors can again benefit. Insiders believe that factories have already made long-term plans for distributing their residual stocks. If the connection with the new harvest is not made in time this summer, or if it is smaller, this will throw a spanner in the works.
Export record
In February, American chip exports still fell, but in March they came back strongly and even reached a record. More than 12% more was carried out than a year earlier, according to the most recent figures. Canada also exported significantly more fries. Not all export figures for all countries are known, but it looks like a record amount may even have been exported by the major French fries producing countries in March. While the corona pandemic still has some countries in its grip, daily life is recovering in many places. The fast food sector only benefits from this.