Potatoes Price Analysis - May 2025
Summary
Key Findings: Potato prices in the US showed a 0.9% monthly decline in May 2025 to $0.958 per pound, despite ongoing supply challenges and reduced production. The market continues to face headwinds from decreased acreage, processing contract reductions, and global competition, while prices remain below production costs for many growers.
- Current Price: $0.958/lb in May 2025 (down 0.9% from April)
- Annual Trend: Down 0.6% year-over-year from May 2024
- Market Status: Prices below breakeven levels for uncontracted potatoes
- Supply Outlook: Reduced production and acreage cuts continue into 2025
Recent Price Trends
The latest BLS data reveals mixed price movements across different timeframes:
- Monthly: -0.9% decline from April to May 2025
- Quarterly: +0.1% increase over 3 months
- Semi-annual: +0.2% increase over 6 months
- Annual: -0.6% decrease from May 2024
Historical Context: The current price of $0.958/lb represents a significant decline from the peak of $1.094/lb reached in August 2023, when prices were driven up by severe weather conditions and supply shortages.
Key Market Factors
Supply Chain Challenges
The 2024 North American potato crop decreased by 19.51 million cwt (3.4%) from 2023, with U.S. production down nearly 20 million cwt or 4.5%. Despite this production decline, open market tablestock prices have generally been lower than the previous year, which is unusual as markets typically respond to production decreases with improved prices.
Acreage Reductions Continue
Potato growers nationwide are facing challenges with reductions in contracted acres and prices, leading to an estimated 40,000-acre decrease in planted acreage, with the Pacific Northwest accounting for 33,000 acres. With fewer plantings, the seed market has weakened significantly, causing widespread seed dumping.
Processing Sector Pressures
Processing contracts are widely expected to see both a reduction in price and in contract volumes. McDonald's, a major purchaser of french fries, reported a 3.6% decline in year-over-year sales and a 2.6% drop in customer visits this quarter, citing reduced dining out as consumers tighten budgets.
External Factors Impacting Prices
Weather and Climate Events
The spring 2025 Florida crop has been set back due to freezing temperatures in January. Weather continues to be a major factor, with potatoes being a weather-sensitive crop, and extreme weather events like droughts, floods, and heat waves reducing yields, as seen in Idaho's 2018 drought.
Global Competition
The major European potato producing countries produced 833.5 million cwt of potatoes from the 2024 crop, an increase of just over 30 million cwt from 2023. European crop production is important as they are the major competitors to the U.S. and Canada in the global french fry trade.
Input Cost Pressures
The potential for tariffs creates uncertainty because many fertilizer components used in the U.S. are generated in Canada, Russia or China, and potential tariffs could raise fertilizer prices over and above the norm. This uncertainty is creating challenges for growers looking to finalize contracts for 2025.
Market Outlook
Near-term Challenges
Stable pricing agreements benefit contracted potatoes, but many producers face reductions in contracted acres, while recent surpluses of open market potatoes have driven prices down and will keep them below breakeven levels in the near term.
Supply-Demand Imbalance
Generally, open market potato prices continue to be below the cost of production, even with the 5% reduction in production from 2024. Should processing contract reductions occur and acreage cuts not materialize in the processing sector, this could lead to a further increase in open market supplies, thereby likely reducing open market prices further.
Export Considerations
Tariffs could impact export demand, which accounts for nearly 15% of potato production, adding uncertainty to domestic markets and raising concerns about whether processors have sufficiently adjusted to changing demand levels.
Regional Variations
Pacific Northwest: Planting is progressing across the West; growers in the Columbia Basin and western Idaho have finished planting, while in Oregon's Klamath Basin, producers will receive a full water allocation for the first time in four years.
Storage and Quality: Overall seed supplies will be down going into the 2025 crop season, although overall supplies will be adequate to plant the 2025 potato crop across the U.S and Canada.
Summary
The potato market in May 2025 reflects a complex interplay of reduced production, weakened demand, and ongoing structural challenges. While supply has decreased, demand pressures from reduced consumer spending and processing contract cuts have kept prices below profitable levels for many growers. The industry faces continued uncertainty from potential trade policies, input cost inflation, and weather-related risks that could significantly impact the remainder of 2025.