Domestic market update - 02 October 2020

Friday, 2 October 2020

September continues to see slow trade in most sectors

Overall free-buy potato trade during September remained minimal. The re-opening of schools did bring some demand to the lower end of the processing sector as anticipated, but prices remained low.

The introduction of increased restrictions in many regions across the UK may lead to a further reduction in demand especially for the food-service sector. It has already been felt in some sectors with buying described as hand-to-mouth.

Some export trade has shown signs of optimism for the industry, especially exports going to the Canary Islands. Demand for specific varieties remained strong, gaining good premiums. Generally the price spread was large between domestic trade and export trade to the Canaries.

Weather

The weather during early and mid-September remained relatively mild compared to the high-pressure period of storms observed at the end of August. Most regions were able to finish lifting early-crops and maincrop lifting began for many.

Rainfall has been very sporadic across the country with some regions significantly affected. Some regions saw lifting grind to a halt in September due to waterlogged fields. On the other hand some growers are irrigating in front of the harvester in order to prevent bruising caused by dryness.

More rain is on the horizon for most of Great Britain and growers are trying to lift as much as possible before this comes.

There have been reports of some growers are lifting directly into storage in the hope of a higher price later in the season.Although this may lead to further issues of oversupply later in the season if demand remains subdued.

Trade overview

Free-buy

Free-buy markets are still relatively quiet with the vast majority of trade continuing to take place on contract. This said, there has been a slight increase of free-buy material moving through our weekly average price survey (WAPS) sample compared with August.   

Prices have remained relatively low for free-buy supplies moving into domestic markets due to the supply and demand picture for most sectors.  As maincrop lifting gets underway supply is plentiful although those that can are generally lifting into store now in a bid to ease the pressure.

Contract

Contracted tonnage moving through our WAPS sample has continued at the same volumes as August but still dominates the trade.

For week ending 26 September, the WAPS average price (including free-buy and contract) is £150.56/t. This is up £42.14/t on the free-buy price for the same week implying contract prices are well above those on free-buy.

Sector overview

Packing

Despite the packing sector being described as the one with most demand, the main volume of trade is still mostly fulfilled on contract. Maris Piper has been fetching a premium over generic whites throughout the month with demand for this variety relatively strong.  

Throughout early September, dry weather was causing problems with bruising but the recent rain has hopefully relieved these concerns somewhat.

Bags

Following seasonal demand, with school holidays over, chip shop trade is quiet. Throughout September the demand has remained subdued. As increased lockdown measures and trading curfews were brought into play, buyers are conscious of holding stocks in case trade is hampered further. Some are describing buying patterns as hand-to-mouth at the moment.

Ex-farm prices have remained low throughout September as a result of the lacking demand and increasing supply as lifting continues. At times, Agria has managed to gain a premium over other varieties but trade is still in low volumes.

Processing

Similarly to the packing sector, demand is primarily covered by contracted material. Increased lockdown measures and curfews have weakened the confidence surrounding a return to normal for the foodservice sector. Towards the end of September any free-buy trade is generally just top up to contracts and in small volumes.

Prices vary depending on the end job but have been quoted as low as £25/t for whites moving into a low end peeling market.

Alice Bailey

Senior Analyst Potatoes

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