Potato prices bullish as demand increases

Potato prices have recovered from their recent dip as supplies tighten and demand from Europe picks up, helping create a bullish outlook for the coming months.

The Potato Council’s GB survey put stocks at 3.084m tonnes – 8.4% below December 2009, but still 5.3% higher than the 2003-2009 average.

Utilisation from 1 July to 31 December was 3% higher, year-on-year, at 2.356m tonnes – the highest since 2006. With strong demand to northern and eastern Europe, and with few domestic quality problems, the outlook was very positive, said senior analyst Jim Davies.

“The Russian ministry of agriculture said production last year was 22m tonnes, compared to 31m tonnes in 2009. That suggests it will need to import more than 500,000t, against 375,000t in 2009. The largest exporters are usually Holland and Belgium, so while there will be opportunities for growers here to supply Russia, a lot of transactions will go via those countries first.”

Potato production across the five biggest EU producers – Belgium, Germany, France, Holland and the UK – was 4.4% down year-on-year at 23.8m tonnes – the smallest crop since 2006. “In northern Europe there is strong export demand to Russia and eastern Europe – but pricing is fairly competitive to preserve sufficient domestic stocks.”

The Potato Council’s weekly average price improved by £6/t in the week to 21 January, to £164.74/t – similar to post Christmas levels. “Prices were very strong post Christmas – while it was very cold people were reluctant to open stores,” said Mr Davies.

Although values dipped as supplies increased, they had now recovered, and were £53.67/t higher than the same time last year. “The Free Market Average also increased by £4/t, to £178.30/t, as growers were able to obtain more for best-quality packing and bag material.”

Good confidence in the packing sector, underpinned by export demand, meant prices remained stable, he added. “A few growers holding top quality free market stock are requesting, and occasionally receiving, higher offers. In contrast, packers report a slow to steady demand into supermarkets and are attempting to resist any increases. Most are also still concentrating on contract movement, leaving a more limited interest in the free market at present.”

Chipping demand remained slow, although interest for best frying stock was likely to remain solid until the end of the season. Meanwhile, new crop plantings were under way in the south of England, with about 150ha completed by 24 January.

“Dry weather is forecast this week with good planting progress expected, including a start on crisping varieties.”