Crop Transition Findings and Strategy
June 20 2018
The Crop Transition Conference in Minneapolis examined the 12 week period from July 14th to September 29, 2018 and tried to determine the shipments that would occur in each week from the US and Canada. Shipments in the early weeks would compromise old crop, weeks in the middle would be both old and new, and weeks in the end would be entirely new crop. The various weeks were then broken out into russets, reds, yellows, and round whites. Based on input from each region here are some of the observations.
The supply of yellows in the transition period will likely take care of themselves. This is aided by good demand and a late spring in areas like Wisconsin, which will allow other areas like Kern county good movement before more volume comes in. In Canada, we wouldn’t anticipate much volume before the week of August 4th.
The situation is more complicated given the large supply of old crop coming out of the Red River Valley. Shipping data from previous years show red shipments should not exceed 175,000 cwt./week to maintain positive pricing. In the first 3 weeks of the period, the market will be shipping 250,000 cwt./week just as the first area of new crop comes on in Big Lake Minnesota. The strategy would be to presell 250 loads a week to remain profitable. Shippers will need to communicate the best way to do this. In Canada, we would expect production coming in during the week of August 18th.
The first 6 shipping weeks in the transition period are projected to be lower than the 3-year average. This is again due to a late start by Wisconsin, but also due to significant reductions in carryover in Idaho. Last year Idaho carried 2.2 million hundred weight into August. This year’s projection is less than 800,000 cwt. It takes about three weeks to fill the pipeline again so warning flags would be raised in the week of August 25th. Product will have to be sent to storage or presold in the weeks of September 8, 15, and 22nd to prevent that initial downward spiral. Those weeks also tend to coincide with a period of low demand, so the Idaho Potato Commission has stepped up with an ad campaign during harvest. In Canada, we would expect first russets coming in during the week of September 29th, so we will be handed a market based on what has happened in those weeks before.
The meeting did not spend a lot of time on round whites but in Canada we would anticipate new crop during the week of July 21st, but not significant volume until the weeks staring with August 11th.
One conclusion was clear at the end of the day. Communication is essential between shipping areas so everyone is aware of the volume being supplied to the market in those critical weeks. In summary: Know what you grow, your supply, and how it meets what the market actually needs.
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