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GB end-January potato stocks at three year low

Publication Date: 
11 March 2016

Arthur Marshall, Analyst, arthur.marshall@ahdb.org.uk, 02476 478 956 & Lydia Hamer, Trainee Analyst, lydia.hamer@ahdb.org.uk, 02476 478 804

GB potato stock levels at the end of January are estimated at 1.9Mt, the lowest level for this point in the season since 2012/13 and around 350Kt less than the end-January 2015 estimate. The latest estimate is based on AHDB survey data received by the end of February 2016, covers grower’s stocks only and does not include stocks held by purchasers. Furthermore, when considering comparisons, it is worth being aware that the error margin for the estimate is +/- 140Kt.

Although end-January stocks were at their lowest level since 2012/13, they remain in line with the lower level of production this year and hence are not a surprise. The estimate suggests that the rate potatoes have left farm may have slightly increased year-on-year but these changes are minor compared to the difference in production.

What’s in store this year?

At the beginning of the season, total GB production was estimated at 5.4Mt, the lowest level since 2012 and the fifth lowest on record. This set a tight tone to markets from the beginning. Following that, strong retail sales over the festive season, highlighted in the latest consumer category report, have added to suggestions of relatively limited supplies relative to demand – especially in the packing market.

Weekly average prices have been similar to those in 2010/11 and 2013/14, generally rising since the New Year and leaving a number of farmers reluctant to sell their stock in anticipation of a continued upward trend. However from this point, the increase was sustained in 2010/11, while it flattened and weakened in 2013/14. This shows the scope for prices to change from here and hence it is useful to consider stock levels and the rate of release of potatoes from farm, amongst all of the other factors which could impact the market, to provide clues to which trend we might see this year.

Stock levels are low – but not a surprise

At a glance, stocks at end-January being the lowest since 2012/13 might suggest relatively limited supplies for the rest of the season. However, we already knew that production was estimated around 320Kt lower than last, so stocks being seen 350Kt lower is not a surprise. The lower supplies have already contributed to the relatively high price levels we have witnessed this season.

Looking at stocks as a proportion of production reinforces this. At the end of January, stocks as a percentage of production were estimated at 36%. Despite being 4% lower than last year it is a similar level to the preceding four years. This suggests that GB potato farmers tend to keep a relatively stable proportion of their crop in store in the first half of the year, almost regardless of the prevailing price conditions.

The release of potatoes from farm also looks quite similar to previous years. When comparing against the relevant end-November estimates, the end-January figures suggest that approximately c1.24Mt was released from farm in Dec/Jan 2015/16 compared to c.1.19Mt last season. This would suggest a small c.50Kt uplift but given the error margins of the stocks survey, this cannot be seen to be definitive evidence of an increase.

Concluding comments

The latest estimate suggest GB potato stocks are at a three year low. Lower production this season has contributed greatly to the lower level. With this taken into account, the stocks position should not be viewed as a great surprise. With a few more months of the season left, levy payers should keep a close eye on the pace that potatoes continue to leave farm, the latest import and export figures and the updated position on retail demand in order to keep in touch with potential price direction. All of these factors will be reported on in the new style Potato Weekly as soon as new information becomes available.

Month End-Jan 2013 End-Jan 2014 End-Jan 2015 End-Jan 2016
Estimate, Million Tonnes 1.7 2.0 2.3 1.9

 

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