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U.S. Potato Prices Strengthen

Tight supplies are pushing potato prices higher in the U.S., but those better prices probably won’t last long.

“I think we are coming into a crunch time for potatoes,” said Bruce Huffaker with North American Potato Market News.

That’s good news for potato growers who have seen relatively flat prices at near cost of production levels for the last five years.

Many growers found themselves wondering what to plant last spring. While potato prices were low, the prices of competing crops weren’t much better.

Still many industry watchers expected growers to plant the same number of acres as the previous year or maybe even more potatoes. Instead, growers nationwide planted 180,000 fewer acres. Not only that, but yields across the U.S. were lower than projected. Idaho saw production drop by 5.7 per cent.

“We are running up against a situation where Russet potato supplies are getting tight,” Huffaker said. As a result, Russet table potato prices are 50 per cent higher than this time last year.

Huffaker expects competition for Russets may get fierce before the 2018 crop is harvested. Processing plants, especially those in eastern Idaho, have been changing hands which created uncertainty among potato growers. Those ownership changes also delayed contracting last spring which added to grower uncertainty and an unwillingness to grow open market potatoes.

But with processing demand running at the same level as last year and supplies short, Huffaker thinks processors will have to begin pulling potatoes from the fresh market stream.

“If the processing numbers are correct (for the first half of the 2017-18 marketing year), that means a 22 per cent cut in fresh shipments,” he told producers during an agricultural outlook conference. “The battle between fresh and processors will be boosting prices throughout the season.”

Until three years ago, growers in California were growing Russets specifically to meet the June-July demand for fresh potatoes before harvest began in other regions. With those growers out of the potato business, the only Russet table potatoes coming to the market will be coming out of storage until late July.

“It’s going to be hard to come up with enough potatoes,” Huffaker said.

But he also expects this to be a short-term market crunch that will likely resolve itself by harvest. He is concerned that growers who didn’t plant potatoes last year and are faced with low grain and hay prices will be tempted to plant more potatoes.

Managing potato production to keep prices above production costs is difficult because even a small change in acreage can have huge ramifications on price.

If just one per cent of the state’s wheat acres shift to potatoes this spring, potato growers will face a financial disaster. Conversely, if all the state’s potato acres shifted to wheat, growers wouldn’t see a huge impact.

He recommends that growers plant only for known markets and avoid the temptation to speculate on open potatoes.

“Please, as you do your budgets, you need to do a ‘what if’ analysis,” Huffaker said. “Acreage will be up in 2018 and it will be up across the board.”

Source: Twin Falls (Idaho) Times-News

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