The western world seems cautiously back to 'normal', read the precovidium. The catering industry is slowly filling up again and the demand for chips is also increasing.
The phasing out of restrictions imposed by governments appears to be giving the economy a boost, which is reflected in the exploding raw material prices. This has actually been going on for some time, but there now appears to be an impending boiling point.
The main cause of the enormous demand for fries is that the various chains have been disrupted in production and distribution due to the corona crisis. Look at raw materials such as grain, corn and soy that are showing record high prices, but also wood, iron and even high-tech materials such as chips for the automotive industry.
Stocks reduced
The corona lockdowns have temporarily shut down economies. Many countries, but also companies, ran into problems with this. Drop in demand was the most important factor. The reduction of inventories in the chains of various sectors was one of the consequences. The less wealthy countries in particular reduced their raw material stocks to create liquidity, for example to pay for medical aid and/or to keep the economy going.
The hospitality industry has also been busy trying to survive. Due to the closure, valuable stocks have been reduced or even reduced to zero. Something that is now clearly noticeable in the demand for the end product. Take the Dutch catering industry. These are supplied with chips by the intermediary, who in turn purchase from the wholesaler and the wholesaler in turn purchases from the chip industry. If a chain is shut down, everyone stops purchasing and keeping stock. After all, it makes no sense as a catering industry to have a freezer full of fries; Ultimately, it is perishable and it also costs money. So the stocks are being removed and reduced. Something that also happened throughout the chain.
What now?
Now that everything is starting up again, the different parts of the chain need to be filled again. This causes a demand explosion in the sales of fresh fries, but especially in the demand for pre-fried products. This effect is further enhanced by the summer weather, the major events such as the European Football Championship and the Olympic Games. This means that the Northwest European chip industry can once again use maximum capacity to meet demand. It seems a logical consequence that it will have some effect on the price of chips and therefore the price of raw materials.