Supplies of french fries in North America are tight after increased purchases throughout the last half of 2021, the Dec. 30 issue of the North American Potato Market News (NAPM) says.
Buyers purchased 3.1 per cent more domestically produced french fries between June 1 and Nov. 30 than a year earlier, the report says. Processors also used 0.8 per cent more potatoes for purposes other than dehydration during that period and 18.6 million lbs of finished product was pulled out of inventory.
The report notes fryers removed 48.7 million lbs of finished product from freezers during November, which is 12.9 million lbs more than the average November stocks drawdown.
“It leaves the industry with a 31.0 day supply of finished product in storage. That is the lowest November inventory, relative to use, on record. It puts the industry in a challenging position for the remainder of the 2021/22 processing season,” the report says.
NAPM says fryers an unlikely to avoid taking the year-ending inventory below a 30 day supply. The five-year average December drawdown has been 50.1 million lbs, with a maximum decline of 91.1 million lbs. The report notes if the demand of the past six months continued, fry plants would have needed to run much harder than usual to maintain supplies at the pipeline minimums the industry is used to.
“While freezer stocks decline about 75 per cent of the time, during November, this year’s drawdown suggests that supplies of finished product will be extremely tight for the foreseeable future.”
The report says fryers may have difficulty increasing finished product inventories during the next six months. Strong demand and tight raw product supplies could limit any inventory buildup during the first six months of 2022.
“The usage data reflect strong demand for french fries. It also is likely that imports of french fries from Canada are behind last year’s pace. That adds to the need for more domestic french fry production.”