It’s a spud and onion soap opera out there - The Packer

It’s a spud and onion soap opera out there

03/23/2012 08:39:00 AM
Andy Nelson

Onions and potatoes aren’t the most glamorous produce commodities. 
They have their own weekly U.S. Department of Agriculture market report, and you wonder if that’s because the government decided to create a subcategory for nonglamorous commodities, and someone piped up with “How about onions and potatoes?”
And yet, if you’ve been following the onion and spud markets and industries the past few years, you’d think they were top candidates for their own soap opera or reality TV show — something, you know, kind of glamorous.
It’s now spring 2012, and here we go again. Another interesting chapter in the ongoing drama, albeit untelevised.
Let’s start with onions, whose roller coaster-like price curve has amazed me frequently in the past. 
I reported recently on how shippers were confident that sweet onion prices would pick up this spring after a very sluggish winter.
One reason is Texas, which should begin shipping in volume in April. Retailers are excited about reports of expected good quality and size.
But the main reason Texas markets will likely be stronger is that onion acreage in the state is expected to be about 30% lower than last year, Don Ed Holmes, owner of Weslaco, Texas-based The Onion House, told me.
That big number sent me scurrying for other numbers. 
About 4.14 million cwt. of onions shipped out of Texas in the spring of 2011, at an average price of $14.70 per cwt., according to the USDA.
That price seemed awfully low, so I checked prices from the year before. Sure enough, in spring 2010, the average hundredweight of Texas onions brought $50.20. 
You read that right: fifty and change, or more than three times the 2011 price.
Not surprisingly, Texas spring production in 2010 was just 2.67 million cwt., far below the 2011 total.
Like I said, kind of a soap opera. Holmes even gave me an idea for a possible title.
“After the good year in 2010, everybody was chasing that dog last year,” Holmes said, talking about the big uptick in acreage and subsequent big dive in price.
Coming up next on ABC, “Chasing That Dog: The Sweet Onion Market Saga.”
Potato yo-yo
And make sure you tune in tomorrow for “Spud Markets 2012: Back to the Future?”
The creation of United Potato Growers of America and its state-level affiliates did a good job for several years of lowering acreage and boosting long-sluggish markets.
Then yields went through the roof in 2009, and markets started to sink again. 
But the yo-yo did what yo-yos do, and the 2010-11 season turned out to be one for the record books. 
For long chunks of that season, prices for 50-pound cartons of russets flirted with or broke through the $20 ceiling.
Some shippers told me they had never seen prices so high for so long.
Alas, this is the potato market soap opera we’re talking about, so you can guess what happened in 2011-12. Production shot up 5% from the year before, and markets found their way south of $10 once again.
That’s not the end of the story, though. 
While fresh volumes have been high and demand sluggish, french fry, dehy and other processing markets have started running out.
Everyone knows how much we all love fries. As a result, the Processing Giant has started stalking the fresh sheds, gobbling up everything in sight.
“It could send things spiraling out of control a little bit,” Kevin Stanger, senior vice president of sales and marketing for Idaho Falls, Idaho-based Wada Farms, told me. 
“We don’t need $6 markets, but we also don’t need $30 markets. At $6 you’re losing your shirt, at $30 you’re shutting down demand.”
So there you have it. Just a couple more routine chapters in the lowly lives of the pedestrian potato and onion.
What's your take? Leave a comment and tell us your opinion.

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