As a result of the smaller potato harvest in the United States, the stock of finished product is very tight. Although there was less consumption in December, that has little effect on the closing balance. Market opportunities abound, but can Europe fill this gap by supplying more product?
On reference date December 31, there were 22.500 fewer tons of frozen potato products in American cold stores than was the case a month earlier. This brings the total stock that started 2022 to more than 480.000 tons. That is over 5% less than a year earlier in the same period. Although less product has been consumed, supplies are extremely tight. This has everything to do with a disappointing potato harvest in North America in 2021.
Tightness record
The volume in stock is about right for a tight month of chip consumption in the States. Never before has the situation been so tight since figures have been recorded. The potato industry therefore does not have a buffer. By the way, supplies have been tight since last year. Factories do not have enough stock to last a month.
It is common for inventories to be built up slowly in the first quarter of the new year. This would mean that the stock could theoretically increase by 390.000 tonnes. On the other hand, more is usually consumed than produced in the second quarter. This extra stock is therefore desperately needed.
Transition will be exciting
The transition between the old and new seasons will be very exciting for the factories in North America. Free potatoes are usually purchased in July if required. Due to the limited harvest, these are less available. The new harvest is then switched to in August. All the more reason to expand production for 2022, especially in the early segment. Planting will start in the earliest US regions next month. One of the biggest problems is finding enough seed potatoes.
The potato harvest in Canada has been variable. It is especially good on the east coast, while the west has had a very dry year. Even now it is still extremely dry. Fewer potatoes cross the border from this country. This offers an opportunity for European countries such as Belgium and the Netherlands to supply end products to the US. A clear growth market. But potatoes are also in short supply in Europe.
24.000 tons shortfall
American analysts do not expect that Europe can make the difference to fill a gap of 24.000 tons of fries. That is the difference between the stock in 2020 and the current stock. However, it does mean that the demand market continues to exist. That is positive for the price of the end product. A higher price for fries and potato products is also required to compensate for the significantly increased cost price of processors.
This means that consumers will ultimately have to pay more for a bowl of fries. In extreme cases, it may even happen that fries are no longer in sufficient supply. This is already visible in countries at the end of the export chain, such as Japan and Malaysia. McDonald's limits there is the amount of fries a customer can order.