Domestic market update - 04 September 2020

Friday, 4 September 2020

What's happened during August?

Trade during August remained at relatively low levels throughout the month, similarly to July. While the food-service sector did benefit from the governments eat-out-to-help-out scheme, the knock-on effect of this was a shift in demand away from the chipping sector.

Towards the end of August, the reopening of schools did help bring some fresh demand at the lower end of the market for the processing sector. However, with new-crop lifting underway, this has added a large volume of supply to the already over supplied market.

Charlie Reeve

Trainee Analyst

Weather

The weather throughout August has been varied. High temperatures towards the end of July carried on through early August with little rainfall during this time, limiting crop conditions.

By mid-August, heavy rainfall and thunderstorms began to sweep across the UK. The rainfall offered some much needed respite for many regions, helping to support yields and crop conditions. However extreme rainfall did halt lifting in many areas and lead to other issues, such as saturation and flash flooding. Low pressure towards the end of the month continued the unsettled weather, with temperatures much cooler in recent days.

Trade overview

Free-buy

Free buy markets are still operating at a lower volume of trade due to the impacts of coronavirus. Supply has remained strong, with the lifting of new crop keeping the market well supplied.

Despite a minimal uplift in demand on the previous month, prices are still being pressurised by the volume of available supplies.   

Contract

While weekly variations have been seen in the WAPS price, largely driven by the varieties and quality of the material traded that week, the average price is still down compared to the previous month.

The gap between the WAPS average price and the free-buy price is also larger than this time last year, with free buy prices being notably lower.

Old-crop trade has pretty much ceased now, with 2020 new-crop being the main supply to the market.

Sector overview

Packing

Demand erosion has been less severe in the packing sector versus other sectors and currently it is still faring relatively well.

Contracted material continues to make up most of the trade for the packing sector, with the free-buy market remaining quieter.

Maris Piper has been holding a slight premium over other varieties, although whether this will continue is still to be seen.

Bags

Chip shop trade has suffered throughout August, despite coastal areas maintaining a level of demand from holidaymakers. The Eat Out to Help Out scheme has shifted some of the demand away from chip shops to other sectors. In addition, the cooler, wetter conditions at the tail end of the month had limited consumer footfall to some coastal operators.

Some support for prices was noticed when lifting slowed during mid-August due to heavy rainfall, although this was minimal and sporadic. Now lifting has generally resumed, a large supply of potatoes is available and once again limiting prices.

Processing

The food service sector has seen a notable uplift in demand throughout August, primarily due to the governments Eat Out to Help Out scheme. There’s been mixed response amongst industry as to how this demand uptick has supported the wider industry. However, it has helped increase the volume of potatoes being consumed out of home compared to July.

Looking forward to September, the reopening of schools should help to support the lower end of the market for the processing sector. However, social distancing and parental confidence may see hot lunch volumes not return to pre-lockdown levels for some time.

Many restaurants are continuing a version of the Eat Out to Help Out scheme through September. If this is well received, it could continue to help provide an additional demand outlet.


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