| 10 August 2004 |
The new potato harvest is just around the corner and KMC is - as always - eagerly anticipating the new crop. When evaluating the situation three things need to be considered: Supply and demand Crop expectations Carry over stocks The supply and demand situation is expected to be relatively stable over the next few years. The industries that have been able to substitute cheaper starch types for potato starch have already done so and we even see some of these customers returning due to the higher efficiency, etc. of the potato starch. The consumption of potato starch in the food market is expected to grow steadily with a couple of percent per year on average - ranging from a stable market to fast growing markets in developing countries. Carry over stocks At this time stocks are almost empty all over Europe and the industry therefore starts the next campaign with very low carry over stocks. We expect the total carry over stock in Europe to be at an absolute minimum level. KMC will start the new campaign with a minimum carry over stock, just barely enough to still guarantee supplies for our regular customers. Crop expectations At this time the crops look good. The weather in Europe has in general been favourable. KMC expects to produce its allotted quota. With the very sandy soil and artificial irrigation systems in Denmark KMC is usually not affected by weather changes. It is, however, too early to give firm indications on quantities for Europe in general, but at this time crops near the quota, which is 1,760,000 tons for Europe in total are expected. Conclusion In general, the market at this time looks stable. With expected crops near the quota we foresee a year where supply will meet demand. Much can, however, happen between now and harvest time. With very limited carry over stocks any adverse weather ruining part of the harvest can, of course, drastically change the market. Local market areas may further be affected by currency fluctuations, export refunds and finally the supply/demand balance of other starch types (wheat, corn, tapioca) could impact the potato starch business in case of drastic deviations. 
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