Idaho’s fresh potato industry has seen markets collapse over the last two or three weeks, and no one seems to know why.
“There are as many theories as there are people,” said Bruce Huffaker, publisher of North American Potato Market News.
Huffaker’s weighted average of shipping point prices for Idaho Russet Burbanks has dropped from $17.02 per cwt. the week ending June 13 to $11.35 last week.
There’s no good excuse, he said. It appears people are selling in a panic.
USDA’s June 1 stocks on hand report showing that stocks were up 7 percent over two years ago would seem an obvious factor, but USDA’s reporting system has been broken since sequestration. Huffaker doesn’t trust those numbers at all, and doesn’t think anyone else is paying attention to them either, he said.
There’s no doubt that there are fewer potatoes in storage than last year, he said.
“I have no idea why they’re going in the tank,” said Klaren Koompin, an American Falls contract grower who has served on many industry boards.
Four or five states are shipping more than ever before. There will be plenty of new-crop Norkotahs coming on line, but they’re not here yet, he said.
Idaho won’t start shipping Norkotahs until the end of this month and into August, but it might be encouraging people to sell potatoes they have in storage, Huffaker said.
The staff at Potandon Produce in Idaho Falls doesn’t know why potato prices have dropped, said Lance Poole, vice president of potato and onion marketing.
“I don’t see anything out there driving markets lower. There’s no reason for the crash,” he said.
Back in April, stocks on hand we’re down and the company thought there was a shortage, he said.
Obviously, it’s a supply-and-demand issue; there must be too much supply. But Potandon’s business is good and nothing from its customer base reflects any reason for such a decrease in prices, he said.
The fresh potato business is relatively stable with no new business and repeat customers ordering the same product, such as 50-count potatoes. There are only so many orders out there, so maybe some warehouses are oversupplied and cutting their price to take orders away from other warehouses, he said.
Colorado, Washington and Wisconsin—which usually run out of potatoes before the new crop comes in—have ample supplies this year, but the true supply situation is unknown, he said.
One possible contributing factor is that Mexico opened countrywide access to U.S. potatoes for one week only to shut them down for three weeks due to a lawsuit filed by Mexican growers, he said.
When the border reopened Monday, U.S. potatoes were allowed back into the border zone but not the whole country, which should help support prices, he said
Mexico’s closed markets are a contributing factor, although it should be hurting Colorado much more than Idaho, and that state’s prices haven’t fallen as much as Idaho’s, Huffaker said.
Another factor could be that Idaho’s shipments in June were up 9 percent year-over-year, and although that’s balanced by reductions in other states, Idaho could be pushing more potatoes into the market than the market wants, he said.
Source: Capital Press