Potatoes

Potato updates

Supply-demand imbalances.

The potato industry is grappling with significant challenges balancing supply and demand.

The excess of 2023 potatoes in storage has kept prices depressed at the start of the 2024 crop season. Much of the old crop still in storage has been sent to feedlots to make room for the new 2024 crop. While final estimates for the 2024 potato crop are not yet available, anecdotal reports suggest that potato production in the West is down nearly 5%. In the Pacific Northwest, a notable reduction in potato acreage (down 20,000 acres from 2023) was offset by above average yields and ideal harvest conditions.

Lackluster restaurant demand for potatoes and frozen potato products has further hindered rebalancing of the market. Compounding these issues, the closure of a potato processing plant in Washington has posed further challenges for producers, highlighting weakening consumer demand for frozen potato products.

The industry is also dealing with uncertainties related to irrigation water allocations, particularly in the Klamath Basin, where new drought response programs are being implemented to manage water resources more effectively. As the industry navigates these turbulent times, producers have few profitable alternative crop options and face difficult decisions regarding 2025 crop field prep and planting.

Profitability

September 11, 2024

Potatoes (Contracted): Slightly profitable - Neutral 12-month outlook
Potatoes (Uncontracted): Slightly unprofitable - Bullish 12-month outlook

Contracted potatoes benefit from stable pricing agreements. Decreases in input costs should support profitability over the next 12 months.

A smaller 2024 potato crop is expected to help improve open market prices over the next 12 months. As processors gradually work through the remaining potatoes in storage, the reduced supply should alleviate some of the downward pressure on prices.