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NEPG processing potato markets tightening

Publication Date: 
18 February 2016

Arthur Marshall, Analyst,, 02476 478 956

Processing potato prices in the NEPG (GB, France, Belgium, the Netherlands and Germany) have been rising recently, with usage rates and storage conditions on the mainland leading to expectations of further tightening in the market. Driving the mood in the market, the mainland processing industry is working at full capacity according to AHDB’s European market contacts. Capacity is being fully utilised partly because of the strong performance of processed product exports to non-EU destinations, with frozen processed exports in Jul-Dec 2015 up 60% compared to 5 years ago. Additionally, outside temperatures far above average have resulted in quality concerns for some ambient stored stocks in all 5 NEPG countries.

However, is all of the optimism around European prices justified? The amount of crop still in store tells a slightly different story. In countries such as Belgium, stocks are not looking particularly low compared to previous years (see below). In addition, cold-stored stocks are reported by market commentators to be mostly keeping well. If stock levels continue to be comfortable and potatoes stored are in good condition, it will be important to bear that in mind when thinking about price direction on the European market. With the tighter supply position this season already factored in, we would need to see some new developments to add further upward price pressure.

Tighter mood – but keep an eye on stocks and fresh export demand

The main processing potato prices in the NEPG countries have moved upwards since mid-December, as shown below. For more on the position in the individual countries, please see the end of this article. The tighter mood in the market has meant growers in all countries have been reluctant to sell, anticipating higher prices to come, according to European market sources. This itself may have contributed to some of the short-term tightening in markets but also could present a risk later in the season should large stocks remain on farm as a result.

Fresh export demand is also expected to be firm for NEPG countries this season, adding to the tighter mood. A record low harvest in Poland has been expected to offer opportunities for exports from all NEPG countries, including GB. However, Eurostat data to November shows that although total fresh exports have so far been up year-on-year for GB, France and Germany, they were down 50Kt overall across the NEPG area. 86% of NEPG Exports to Poland have been from Germany so far this season, but Poland may begin looking further for supplies and towards other NEPG countries, including GB, once nearer-by supplies are used – so this is also an area to watch.

The implication for GB

Though potatoes are not the most easily traded product, the GB market does not exist in isolation. Similar themes in terms of market mood and price direction can be seen in both GB and mainland NEPG markets. However, stocks figures are currently the best measure we have for both the evolving supply situation and usage rates (measured by the rate of movement off-farm).

If stocks in NEPG countries do reduce relative to requirements, upward price pressure will likely remain in the mainland processing market. However, if stocks remain at comparable levels to previous years, and exports do not pick up as expected, this implies a steadier rate of movement off-farm and less upwards pressure on prices. With the amount of factors at play here, it’s important to have all of the information needed to make sound business decisions at your fingertips. The new format of Potato Weekly, containing weekly analyses and features on topical market intelligence, will help you with that.


Country summaries*

The Netherlands

Dutch usage by processors has been up year-on-year in the past few months, despite lower production than last season. Adding to this, official statistics released in early February showed a much lower production than estimated by NEPG (3.3Mt compared to 3.8Mt), which may have caught out parts of the market, meaning there is less supply than thought.

Quality of stocks is mostly reported as good, but rot and sprouting are causing concern in some ambient stores. There are fears that problems could become more difficult to manage as the season progresses. In the meantime, growers facing difficulties have been reported to be pushing forward contract movement, although this is anecdotally offset by others holding back in response. Nonetheless, this could increase free-buy requirements later in the year.

Dutch stocks on 15 November were down 7% year-on-year according to VTA, leaving 72% of production in store (based on NEPG figures). This is arguably where markets look tightest, with only November 2012 stocks lower as a percentage of production.



Processors are reported to have been working at full speed, with lower dry matter levels this season meaning more need to be used to make the same quantity of product. Quality is mostly good, but again the high temperatures are causing some rotting, sprouting and fry colour issues.

However, stocks on 1 November were down year-on-year, but more or less in line with the lower production. Stocks on 1 February were even less tight – equal to 51% of production, the highest level since 2009. This does not imply a relatively tight situation, unless the quality of what remains is poor.



Although French processing usage rates for Jul-Dec have dropped 6% year-on-year, this is much less than the 13.8% drop in production there, possibly implying a strong demand level. Usage of French domestic stocks in French processing between Jul-Dec stayed above 400Kt for the second year in a row, well above the level in the previous four years.

Similar to the trend in GB, the French fresh retail market has been in long term decline, but Kantar Worldpanel data shows that quantities sold have picked up so far this season.



Despite the relatively high stock levels (see below), many of these are contracted according to REKA, leaving fewer than usual free-buy stocks. Combined with anticipated export demand, processors reportedly working round the clock and increased processing capacity this year, REKA suggests that this could to lead to a tighter market come late spring – if all these play out.

Stocks in store are reported to be mostly stable, with problems mostly in stocks already facing difficulties (such as those from unirrigated crops or where harvest was delayed by rain). However, in January, stocks were reported to be only 5% down year-on-year, compared to an estimated 16.7% drop in production this season, suggesting a relatively less tight situation than at the beginning of the season.



*All NEPG production and stocks figures exclude seed and starch unless otherwise stated

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