Europa: With stocks almost depleted throughout Europe - new potato season has started

A review…

The planting, as well as the development of tubers was satisfactory until June last year and nationwide, marketers started the new season with great confidence. The warehouses were virtually cleared and a great spring (April, May) saw a rapid increase in available quantities. Probelems with imported goods from Spain, Israel and Egypt as well as an oversupply of local new potatoes were pushing prices down. By the end of July, the tide had turned to international markets. An extended heat period over Central Europe led to stress in the plants. There were all kinds of growth problems and large yield losses were the result. The processing industry raised the alarm and went for the remaining ready-to-eat potatoes. Intense irrigation led to additional price hikes. As fast as stock levels rose, they would go down again.

Both Austria and large parts of the rest of Europe were faced with reduced crops. At the same time, the Federal Republic could at least theoretically achieve an average harvest of 698,000 tons. Specifically, 6.8% over 2017 and 8.3% below the 10-year average. Practically, however, up to 50% of the tubers are difficult or impossible to market due to gross defects.

The total production of potatoes (including processing) of the EU-28 waned by 15% in 2018 and is 8.6% below the seven-year average.

The market situation of selected member states in detail

Germany saw 24% harvest losses in 2017. At the end of December, potato stocks were 35% lower than in the corresponding period in 2017. Seed potatoes are, as in Austria, scarce and expensive. Poland had -17%. National supplies are considered enough to cover demand. The tubers are small and quality leaves a lot to be desired.

In the Netherlands, producers had to accept -22% for processed potatoes and -18% for starch potatoes. Exports are not gaining momentum due to lack of goods and high prices, especially in Africa and Asia. In Holland, too, seed potatoes are a much sought-after commodity. Belgium, besides Holland the largest European exporter of fries, is particularly affected by a crop failure of 20% as compared to the year before. Belgium has worldwide delivery obligations and this campaign made it very difficult meeting them. The high commodity prices with below-average quality are causing problems. The demand for Spanish new potatoes is considered to be correspondingly high.

France was largely spared climatic extremes during the growing season last year and, at 8.5 million tonnes and -7% y-o-y, had a good harvest, according to circumstances. In addition to a strong domestic sales, exports also increased by 10%. Demand for French goods remains strong across Europe, especially Spain and Italy.

Spain has expanded the potato acreage for 2019, but again limited cultivation for export. A majority of Spanish producers remain on the safe side and conclude fixed-price contracts with national retailers. The plantings have already been completed there. The weather so far has been positive.

Assessments on the further course of the market

Inventories are definitely going to clear faster than usual throughout Europe this year. The national markets are all very receptive and no excessive supply pressure is expected from the classic new potato regions of southern Europe.

Although further price increases cannot be excluded, Austrian farmers are tax-exempt, because the storage conditions are not always optimal and the conditions diminish. At the end of March, the last stored products could be sold. The first new potatoes from Egypt and Cyprus have already arrived and are in domestic stores. It is noteworthy that supplies from Israel are expected 1-2 weeks later, ie mid/end of March, if at all, due to the cold, wet weather. Whether it will come to national bottlenecks on domestic potatoes will of course depend on whether the weather plays along and when the first new potatoes can be cleared.

Source: AMA