A Heap of Potatoes

Never noted for glamor, the humble potato has lost so much of its popularity with diet-conscious Americans that per capita spud consumption in the U.S. today is little more than half what it was 50 years ago. Nonetheless, at New York's Mercantile Exchange last week some of the most sophisticated speculators in U.S. business were in a lather over the future of the potato and betting millions of dollars on what it will cost by mid-May. Seldom has the U.S. commodity market seen so wide and adamant a split between bulls and bears.

Only last fall the Agriculture Department condemned the potato to the ignominious chore of feeding livestock in order to reduce a heavy surplus. Then a disappointing European harvest started an unexpected flow of U.S. potatoes abroad.

Canada, too, developed local shortages and lowered tariffs to entice U.S. potato exports. Early last month the Agriculture Department reported that reduced plantings and frost damage would cut the spring crop in the South by 16%.

Betting that there was not enough left of last fall's New England crop to take up the slack in East Coast markets, the bulls at the Mercantile Exchange contracted to buy 10,000 carloads of Maine potatoes at prices ranging from $1.95 to $3.20 per hundredweight for delivery May 14. By then, the bulls believe, potato prices will be up to $5 to $6 per hundredweight, leaving them a fat profit on their future contracts. The bears, who sold the bulls their contracts, are betting just as firmly that there are plenty of spuds in Maine and that prices will slip below $1.50 per hundredweight by May 14. This would leave the bears with a profit of up to $1.70 per hundredweight.

Potato farmers are pulling for the bulls. ("It would be nice to have a bit of a shortage just once," sighed one grower.) But eying the piles of stored potatoes in the barns of Aroostook County, few farmers anticipate a price increase anywhere near that expected by the rampaging bulls. Even if the bulls do win, the Agriculture Department predicts that there will be little immediate effect on retail prices. But by June or July, the department says, the overall U.S. potato supply will probably dwindle enough to raise supermarket prices of potatoes back to year-ago levels of about 67-c- per 10-lb. bag.

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