March stocks estimated at 1.19Mt

Friday, 1 May 2020

Grower held potato stocks at the end of March 2020 are estimated at 1.19Mt. This is 20% higher than the same point last season and 5% above the 5-year average. This puts end-March stock levels at the highest point since 2017/18 (-11%) and the third highest since 2012/13.

The rate of drawdown in grower held stocks has remained below average with 942Kt leaving grower ownership since the end of January. This is 19Kt (-2%) down from average drawdown levels though it remains higher than the same points in 2016/17 and 2018/19. In percentage terms it is a 44% reduction from January stock levels putting it at a similar percentage drawdown as both 2014/15 and 2017/18.

Sector stocks

Prepack stocks are estimated at 494Kt, a 388Kt (-44%) reduction from the end-Jan estimate. This is 88Kt (22%) above the five-year average and 80Kt (+19%) above the same point last season. Prices for best quality potatoes have remained firm despite high levels in supply as quality remains a determining factor. However, a combination of high stocks and increasing volumes entering fresh supply chains from the processing and chipping markets is likely to weigh on prices moving forward.

Processing and other ware stocks are estimated at 417Kt, a 239Kt (-36%) reduction from the end-Jan estimate. This comes in 90Kt (+27%) above the same point last season. Processors have been utilising crops which have been coming out of the ground well into the New Year reducing pressure on stored crops and reducing drawdown. Crisping processors have been unable to utilise much, if any, of this late lifted crop and supplies have remained tighter throughout the season than in the French fry market. The widespread food service closures mean that we are likely to see an increasing volume of this supply entering the prepack market. This being said it seems unlikely that packers would be able to utilise anywhere near the volume required to soak up the excess supply.

Bags and fresh chipping stocks are estimated at 157Kt, a 152Kt (-49%) reduction from the end-Jan estimate. This comes in 19Kt (-11%) below the five-year average stock level and only 3Kt (+2%) above the same point last season. The removal of demand from the chipping market on the back of the coronavirus lockdown has meant that despite reduced stocks, prices have not been supported, with minimal trade in recent weeks. There are reports of chip shops reopening across GB, but sales from these shops are likely to be reduced. Even if all premises re-open it seems unlikely that it would translate into anywhere near normal demand, so over-supply in this sector remains an issue.

The slightly larger stocks at end-March coupled with a drastically reduced forward demand profile for points to a prolonged periods of over-supply across certain sectors of the potato market for the remainder of the season and possibly into the 2020/21 crop year.

The full dataset and sector breakdowns can be found via the stocks dashboard. More detailed analysis on a sector basis will be release in the coming week’s examining the potential impacts during the coronavirus pandemic.

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