The price of Chinese potatoes maintained a high position throughout 2019 and this trend lasted into 2020. However, people in the industry explained that the Chinese potato price may experience pressure later in the season. At the moment, buyers show a normal enthusiasm and market supply is more than sufficient.
The potato price in Dingxi in Gansu and Xiji in Ningxia recently dropped 5 points. The price fluctuations in other production areas are not that large. The Chinese potato market is quite stable but growing slightly weak. There are several reasons for this development:
1. Vegetable supplies increase as the temperatures rise. The overall vegetable price is falling. When potatoes from Yunnan and Shandong entered the market, supply exceeded demand.
2. Consumption in end-markets dropped as a result of the outbreak of COVID-19. The Chinese market suffered a great blow. Some processing factories even declared bankruptcy. Processing factories and restaurants are the most important clients in the potato industry. Many restaurants closed in response to the outbreak of COVID-19. Schools closed as well. This had an enormous impact on the potato consumption volume.
3. Production increased. The potato price remained high in 2019 and in the period prior to Chinese Spring Festival [25 January, 2020] this year. Many potato farmers expanded the surface area devoted to potato plantation in response to the high price. However, the potato price is the result of production capacity and market demand. When supply exceeds demand, when the production volume is larger than the consumption volume, then how can the price remain high?