Business summer 2011 Market News

summer 2011 Market News

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Canadian acreage is up slightly, while estimates point to a major increase in U.S. acreage. June 1st potato stocks increased one per cent over 2010 in Canada. Stocks on hand are up in the East and down in the West. The hockey stick effect could result if storage is not marketed in an orderly fashion.


sum2011-2-market-newssum2011-3-market-newsCanadian acreage could inch up. According to the latest market information provided by Canadian potato growers, we may see a slight increase in acreage this season, which reflects the projected 2011/12 demand situation. Processing companies have reversed some or most of the volume cuts they initiated in 2010, and this will require more acres in 2011. The increase in processing acres may be offset by decreases in the fresh sector, with a total projected acreage increase of approximately 5,000 acres +/- nationwide.


sum2011-4-market-newsAll signs point to a major increase in acreage in the United States. The USDA puts the spring potato crop at 25.83 million cwt., which exceeds 2010 production by 1.01 million cwt. or 4.1 per cent—this would be the largest crop since 2004. United Potato Growers of America is estimating that U.S. growers are also planning on putting more fall crop acres in the ground in 2011 to cover processing increases—approximately 54,000 acres: 27,000 processing, 5,000 dehydrated, 7,000 chipping and 15,000 fresh.

Even though most feel there is a home for all extra acres, it is the understanding of UPGA not all of the supply will be spoken for, which could affect the overall marketing supply.


sum2011-3-market-newsCanada’s June 1st potato stocks increased by one per cent—or 134,000 cwt. above last year’s value. Stocks on hand are up in the east by 11 per cent, but are down in the rest of Canada by 11 per cent, and British Columbia has no stocks on hand at all.

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New Brunswick decreased movement by five per cent in comparison with May to June 2010, and Prince Edward Island increased movement by 11 per cent. Movement was variable across the rest of Canada—Ontario and Manitoba increased 31 and 18 per cent, respectively, while British Columbia (-80%), Alberta (-15%), Saskatchewan (-14%) and Québec (-2%) decreased movement. Total disappearance is up three per cent compared with last year.


sum2011-3-market-newsWith year-end supply relatively lower than last year, and with the new crops delayed, if storage is not marketed in an orderly fashion, prices will spike, which is not good for sum2011-6-market-newsconsumption, creating what is known as the hockey stick effect—prices travel along a constant price line and at the end of the year, when producers and the market notice that stocks are short, prices increase dramatically, creating a “hockey stick” on a price chart. In order to avoid this effect in a tight supply year, prices should increase gradually, as opposed to dramatically.

 


 

Market information courtesy of the United Potato Growers of Canada and industry partners: United Potato Growers of America, Agriculture and Agri-Food Canada Infohort, and Bruice Huffaker, market analyst and publisher of North American Potato Market News.