The Organisation of Northwest European Potato Growers (NEPG) expects a dramatic decline in potato cultivation due to corona. The reasons for this are the continued significantly lower demand due to Covid requirements in the catering sector and the extremely low price level.
The NEPG expects that producers in the north-west of the EU will plant a total of 15 percent fewer potatoes next spring. The reason: Due to Covid-19, the demand for processed potato products in Europe and worldwide fell sharply. Current demand for raw materials from factories is about 85 percent compared to last season before the pandemic, the NEPG reports.
The cartof-off harvest of the five major Western European growers is estimated at 27.9 million tonnes this season, if all the potatoes are actually still harvested. That would be 4.5 percent, or about 1 million tons more than last season.
However, given the low prices and the high costs, this is not certain whether all potatoes are still coming out of the ground. The harvest is also longer than usual and there are still some areas in the difficult very humid regions of western Belgium and the United Kingdom where no harvesthas has been made.
Processors need much less raw material – supply is too great
The current low price level for processed potatoes makes the tense market situation clear. Contract prices at EEX for November are just 5.0 euros per 100 kg and for April 2021 there is not much more listed at 6.50 per 100 kg. A year ago, prices were still 15.50 euros per 100 kg – about three times as high.
European potato processors continue to sit on very large stocks of finished products in their cold stores. They require significantly fewer raw materials over a longer period of time. They are expected to significantly reduce the volume of their contracts with producers next year. Due to the actual costs of growing and storing potatoes, THE NEPG considers that no major change in contract prices is to be expected.
In the last 5 years, NEPG growers have expanded their cultivation area by 7.7 percent. The increase was almost 14 percent in France and 10 percent in Germany, but the other countries also increased their area. This expansion is a huge contrast to the collapse in demand for Covid-19.
With the looming new requirements for the catering industry in the second wave in several countries, NEPG does not expect any changes in the market situation for the coming season. Moreover, the outcome of the Brexit negotiations could also have a negative impact on the market.
Potato prices continue to be very, very low
Dutch stockbroker De Vries & Westermann reports that, in addition to the Corona problems, the recently improved harvesting conditions create a market situation with a good supply. This puts even more pressure on potato prices.
For the time being, the quotations for potato chips from PotatoNL and Belgapom remain at a very low level of 3 euros to a maximum of 4 euros per 100 kilos. The mood in the potato market is more negative than it was at the beginning of October, Dutch analysts report.
Producer prices for mainly solid boiled potatoes in Germany last week averaged EUR 10.35 per 100 kg. That was around 8 euros, or 43 percent less than last year, on the same date – when a good 18 euros per 100 kg were listed.