Potato producers who fail to make use of futures markets are placing good returns at risk in this season of extremely low plantings, warned potato futures broker ADM Investor Services International.

A reduction in plantings of 13.4 per cent on last year – to an historical low of 120,100ha – should ensure a better season in 2003-04 for prices, but there are other factors at play.

'Despite the reduced plantings, if yields are up by five per cent, then the overall level of supply could still prove burdensome, particularly given this year's surplus,' warned ADM's Mike Moore.

'Furthermore we believe demand is also under pressure. Recently we have seen the first fall in manufacturing usage following a long period of steady increases.

'Without new products the market looks saturated. Fresh consumption has also been under pressure for a number of years, as consumers are spoilt for choice with alternative and more conveniently prepared foods. We anticipate this pressure to continue...A yield increase of five per cent with a fall in demand of three per cent could easily negate the lower supply availability from reduced plantings,' he said.

A futures contract can lock in attractive prices being offered already this summer and protect producers from a fall in values over the course of the season to guarantee a good return on investment.

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