Historic Price Volatility for Processing Potatoes

In a recent in-depth analysis of the potato market, Wilhelm Weuthen GmbH & Co. KG’s CEO, Ferdi Buffen, spoke about an unpredictable and historic upward price explosion for processing potatoes that was recorded from May to the end of July, with industrial potato prices of over EUR50 for 100 kg and imports from Egypt, Spain, Portugal, and Scandinavia for processing French fries and chips.

“[…]. But unfortunately, those who climb high also fall low. Also the fall of the quotations within four weeks from EUR50/100 kg to EUR17,50/100 kg on last Friday [25th of August, 2023],” Buffen added.

Buffen's thorough investigation shows that the 2023 crop year's benchmark was established by the potato processing business in November 2022 with the help of some very alluring contract pricing. This not only led to competition favoring potatoes among the arable crops. Within the segments, there was also heated competition. Due to this, the appealing processing potatoes for the French fry and chips business began to take over land that had previously been used for table potatoes, starch potatoes, and even seed potatoes.

“We expect early demand for potatoes from there, especially since production facilities have also been further expanded in Italy and the supply of raw materials must largely come from the north. The notable shifts from seed potatoes to processed goods are a concern for the industry and it is important to take countermeasures,” Ferdi Buffen explained.

Buffen went on to say that the beginning of August was a really exciting moment for the potato processing sector. In his view, a scarcity of raw materials prevented the sector from operating at its full potential.

“The processing figures from July confirm this. Maintenance breaks had to be extended to give the potatoes the missing days of growth. The abundant rainfall in August then provided relief,” Buffen said, adding that the marketing of the early processing potato varieties will also last until mid-September due to the delayed start of harvest.

Trial Harvest and Crop Estimation

Weuthen company expects a below-average 2023 potato crop in the HAFPAL area (Hannover, Frankfurt, Paris, and LeHavre).

“The availability of French fry raw material for the industry will be greater than last year due to variety shift,” Buffen mentioned.

Additionally, he said that within the HAFPAL area, there is still a significant range in yields and grades. In all regions, tuber starts are two tubers less than average. The specialists at Weuthen anticipate higher yields in France and Belgium than they did the previous year.

“Southern Germany, northern Italy, and the major potato country Poland are currently the most behind in trial harvesting. We therefore expect demand from these regions, especially as Poland has also seen a significant reduction in acreage. Hail damage and local heavy rain events may provide demand in the short and medium term,” he spoke on the topic.

What Should Be Expected in the Coming Months

His study moves on to the industries' supply of raw potatoes, which is expected to be dominated by contract goods by the end of October. First, there must be a catch-up on the backlog from the end of July/beginning of August.

“At present, we hope that the price floor for the coming weeks has been reached. Ultimately, it will be a matter of processing the agreed contract volumes in the coming weeks. With the known high level of contract coverage, the current situation of very little additional purchasing demand was foreseeable,” Wilhelm Weuthen GmbH & Co. KG’s CEO explained, adding that the processing industry has created significant capacities and further investments are still being planned or implemented, resulting in a future need for suitable raw material.

2023 Harvest Volumes 2023

Even though the weather has been very vigorous in the last few weeks, Weuthen’s experts believe it will not be possible to completely catch up with the growth backlog.

“There are still a few weeks of growth left. Nevertheless, we would like to forecast the following: Germany: 10,25 – 10,75m tons; EU 4: 22,00 – 22,50m tons + 4,5 – 5,00m tons U.K.,” Buffen’s analysis reveals.

So, according to the experts, this year's crop will be a little bit greater than last year's. Due to segment and variety movements in favor of high-yielding cultivars as well as improved yields in Belgium and France over the previous year, this is the case. This indicates that there is a 2023 potato crop in Europe that nearly meets the sector's needs.

“Of course, this still has to be harvested first,” he mentioned also.

For the potato processing market, Buffen expects daily prices to be around or just above contract prices. There will be very little demand for contract-free potatoes during the harvest period, in his opinion.

“Lots of poor quality will therefore disappear into alternative processing directions during this marketing period. For good quality industrial potatoes, we expect prices around EUR30/100kg in the spring. There will be larger price differences for varieties in demand for export or fast food production,” Buffen declared.

2024 Predictions

The need for dependable raw materials will only increase. Forecasts of 4% annually have thus far never been met. However, there is growing international rivalry among European potato processors. The United States is not the only country vying for the global market. To sell to emerging markets, factories are also being established in China, India, and South America.

“The global market for frozen potato products continues to grow. Specialized potato professionals, upstream and downstream industries can and will continue to benefit from this boom,” Ferdi Buffen summed up.