News Potatoes
Record prices for chips do not deter buyers
Buyers of frozen chips have never had to dig so deep into their pockets for a ton of product. The price level has increased by almost 50% compared to a year ago. The European sales of French fries worldwide still manage to achieve a small growth in volume. This offers prospects for more expensive raw materials.
These statements are based on data from the harmonized world trade system. Figures go up to and including June and show a small growth of more than 1% in that month, compared to June 2021. The volume of frozen chips exported by the EU-28 amounts to a good 176.000 tons. In the past twelve months, the export volume has increased by 7% compared to the 12 months in 2020-2021.
More sales to the Middle East
The Middle East is by far the largest buyer, with Saudi Arabia as the frontrunner. This country bought almost 40% more French fries in June. A quarter more sales were recorded for the Middle East as a whole. South America is second. Sales to this area decreased slightly. Asia did purchase more fries. The largest decrease is – not surprisingly – visible under the heading Russia.
At the same time, one of the highest prices per tonne is paid in the Middle East. There, the average price level has already broken the €1000 per tonne mark, an increase of more than 50% compared to a year earlier. In Asia and North America, €1000 or more is already being paid. In South and Central America, the price is still just below or above €900, but the increase of 60% to 70% is much higher.
In terms of individual countries, Saudi Arabia is the largest buyer of European chips, followed by the United States and Brazil. The latter did purchase a fifth less product, while the other destinations still show more than 40% growth in volume. It is expected that Russia and China will hardly continue to purchase any product from the EU in the coming months, even though these were destinations that bought quite a lot of product.
Will World Cup cause consumption peak?
Countries in the Middle East have the advantage that they currently derive a lot of income from the sale of oil and oil products. This also applies to South American countries. With the imminent World Cup in November this year, a peak in production can probably also be expected, which is already being pre-sorted in good time. The full resumption of tourism worldwide will also ensure that the demand for potato products remains good.
Out of stock
From the beginning of this year, the export of European chips has increased by about 10% and the average price level has risen by more than €200. Looking at the upcoming potato harvest in the EU, the question is whether processors will not be sold out next season if the current demand continues. The harvest is going to be tight and factories have to be careful with every tuber. They are especially concerned about the energy supply of their factories, which after all requires a lot of gas and electricity.
Looking at the current price movement of the end product, the passing on of the additional costs is still successful. On the other hand, the costs for freight traffic have decreased considerably, although there are still large differences depending on the route. An asset of the EU-5 is the low exchange rate of the euro against the dollar, which can also trigger extra buying appetite in the world. The lower sales to China and Russia can then easily find buyers in other parts of the world.
Niels van der Boom
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