5-1 IAT Spuds and Beets

 Friend, analyst, economist and resident genius Michael Stolp is vice president of market research and development for Northwest Farm Credit Services. Today he gives us the outlook on potatoes and sugar beets.

Potatoes -- Increased yields and acreage in 2012 caused a potato surplus. Growers are experiencing the side-effects. Open potato prices range from $1 to $3 per cwt, compared to producer breakevens between $5 and $7 per cwt. For those growing contracted potatoes, contract prices were near $7 per cwt in 2012. Despite low returns, United Potato Growers projects planted acreage will decline by only 3 to 5 percent in 2013. It is expected that a 10 percent reduction in acreage would better balance potato supply with demand.

Sugar Beets -- Sugar beet growers entered 2013 in strong financial condition following a several years of strong demand and pricing. However, growers should expect lower prices and tighter margins this year. Increased sugar supplies and a high stocks-to-use ratio have depressed sugar prices in the U.S. and worldwide. High prices for alternative crops continue to support increased land rents, which will further pressure sugar beet grower margins in 2013. Provided that sugar prices remain above $40 per ton, Northwest sugar beet producers should remain profitable.