Domestic market update - 02 July 2020

Thursday, 2 July 2020

What's happened over June?

June has been a relatively quiet month for potato markets. With lockdown measures easing, chipping markets have seen competition from other food service outlets re-opening.

Throughout June, overall demand has tailed off from a stable May. It was thought that demand would see uplifts as lockdown measures eased, however this has not been fully realised yet.

Weather

The return of rainfall in June has reduced dryness concerns, and provided welcome relief after one of the driest Mays on record. There was a degree of variation in total rainfall figures as some regions, particularly the North of England, received much more than the East and Midlands. This rainfall will aid crop development at a key stage and reduce the importance of irrigation schedules.

Rain showers and warmer daily temperatures increase the risk of potato blight; county risk areas for blight can be monitored using Blightwatch.

Trade overview

Freebuy

June saw quiet free-buy trade across all sectors, with decreased tonnages reported and relatively muted price movement. With the quality of supplies available varying, prices for top quality remained fairly stable, although there were some increases.

The seasonal impact of warmer weather on potato demand was reported, with some saying consumers were opting for ‘lighter’ meal options. The June free-buy tonnage reported in our Weekly Average Price Survey (WAPS) showed a decline from May as we approach the end of the season, the reduced demand somewhat met by contracted supply.

Contract

June saw fairly stable contract tonnages, with demand across most markets at quieter levels. Contracted movement formed a large part of the potato trade this month, meeting a significant amount of the demand available.

Sector overview

Packing

June has continued to see packing markets supplemented, where possible, by processing and chipping supplies. This is usually seen towards the lower end of packing markets, where quality permits. This has pressured some grade 1 packing prices, particularly packing whites.

Retail markets found a stable trading level, which began to ease off over the second half of the month. As food service outlets open up again, there could be declines to retail demand as consumers eat less home-cooked meals. Maris Piper remains difficult to source and so prices have remained firm.

Bags

Throughout June, we have heard anecdotal reports of more and more chip shops trialling opening. Many have opted for a takeaway only service where possible to help with social distancing regulations. June also saw the gradual reopening of many major food service outlets. Some made nationwide news as consumers queued for several hours to order food. As more service outlets opened, demand diluted with consumers exposed to a greater variety of takeaway options.

With more people visiting coastal regions amid the warmer weather, chipping trade across these regions has picked up in parts. Initially the bag trade saw increased demand, but this has since either plateaued or quietened in some parts since then. There is hope looking forward that the next stage of reducing lockdown measures will instil further demand into the bag market.

Top quality old-crop supplies have become increasingly difficult to source as we move closer to the new season. Questions remain regarding the large volume of poorer quality supplies that remain in storage.

Processing

June saw processing markets continue to be mainly supplied by contracted movement. As a result, movement of some processing material into packing markets, where possible, has been reported. A lack of demand for lower quality material has resulted in a build-up of these supplies. As we move closer to the new season, these supplies could well move to animal feed or AD plants if possible.

With UK school pupils poised to return to education in the autumn en masse, this area of processing markets is unlikely to see any uptick in demand over the short term.

Alex Cook

Analyst

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