BusinessMarkets & PricingCanadian Potato Stocks Rise on Pandemic Plunge

Canadian Potato Stocks Rise on Pandemic Plunge

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Canadian potato stocks are up only 919,000 cwt as of April 1 compared to last year, however a collapse in frozen potato product demand due to the pandemic has caused a surplus which is spilling over into the fresh potato market, the April 15 issue of North American Potato Market News says. Surging potato chip demand could also lead to supply problems.

The largest change in potato stocks was a 55.1 per cent in fresh potato demand. Processing use overall rose by 12.1 per cent, due to increased chip demand and spill-over of fry potatoes into the fresh market. Fresh potato stocks rose with holdings up 2.3 per cent compared to last year. The shipping pace has slowed since the initial pandemic panic buying during the last half of March, but retail movement is still higher than pre-virus levels.

“Demand for frying potatoes started to collapse during the last half of March, though fryers may have used more Canadian potatoes during March than they did a year ago. The full impact of the demand collapse will be more apparent when Canada releases its May potato stocks data,” the report says.

Potato stocks in provinces with french fry production was up by 343,000 cwt compared to the same time in 2019. Before the pandemic demand collapse, processors were facing a shortfall of fry potatoes, the report notes. Now they are trying to offload as many surplus potatoes as possible and may need to run the 2019 crop until October.

“In response, Canada’s 2020 contract volumes for fry-quality potatoes will be down anywhere from 10 per cent to 30 per cent, depending upon the location and the company,” the report says. “Some contract volume reductions have not yet been finalized.”

On the chip side, sales have surged with plants struggling to keep  up with demand. Combined chip potato stocks in Ontario and Quebec fell by 43,000 cwt compared to last year. “We believe that chip companies will need to purchase open potatoes in North Carolina and Virginia this year,” the report says.

The pandemic demand drop is also affecting the Canadian seed potato market. Seed potato growers had geared up for increased french fry demand this year, but with processing contract volumes now being reduced, growers are cancelling seed contracts and returning seed, the report notes.

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