Vaccine optimism still leaves agromarkets cold

The news was welcomed with open arms worldwide. Stock markets turned green in Europe, the US and Asia. The Japanese Nikkei index even reached its highest level in almost 30 years this week, which seems almost impossible considering the crisis going on worldwide. The price of a barrel of Brent oil also jumped, rising above $40 per barrel. And although a vaccine can also pull the agricultural markets out of the doldrums, this has not yet been pre-sorted. There is still negative news attached to many raw materials, although wheat is doing well. Just like the onion market.

The potato futures market continues to ripple
The price of the potato futures market (EEX) has been hovering around €5,50 per 100 kilos for some time. The market has been in a negative mood for months due to the loss of demand for fries as a result of the lockdowns in many countries. It is known that some factories saw sales almost halved. That question is not simply restored. There are major concerns in the sector for 2021. And although the futures market is generally a reflection of market expectations, it does not yet show any signs of a possible vaccine that will bring the 'old normal' closer.

Weak dairy demand
The dairy market has 2 faces. On the one hand, sales to retail are better than usual, but on the other hand, sales to food service are in decline. On balance the mood is negative. Cheese and butter prices have been struggling since the second wave. FrieslandCampina CEO Hein Schumacher said this week that higher retail sales can only partly compensate for the lost demand. For example, the dairy cooperative serves the catering industry in countries such as France and Italy, while retail sales are mainly aimed at the home market. The lockdown has created gaps in sales and therefore also in operating results. A major round of layoffs has been announced. As long as the lockdowns continue, there is little prospect of market recovery. 

Onion market is positive
The onion market is the exception to the rule. The mood is particularly positive now that the prices of yellow onions are rising towards €20 per 100 kilos. The revival is mainly due to good export demand from mostly African countries, but Dutch onions are also eagerly purchased in Asia. There even seems to be a shortage of export containers to reach destinations. A new export record is possible if good demand continues in the coming weeks. All in all, there are few corona issues on the onion market, so a possible vaccine seems meaningless for this market. 

Bad week for pork prices
The Dutch pig market had the worst week in months this week, the Vion quotation fell to the lowest level in almost 2 years. The already low prices elsewhere in Europe are also under pressure. The problems are twofold. Due to the corona measures, German slaughterhouses are faced with a huge slaughter backlog of more than 500.000 pigs. In addition, there is much less demand for (pork) meat due to the lockdowns. The market's hopes are pinned on Christmas, although less is expected than in other years. The Danish slaughter giant Danish Crown indicates that the meat market often does not look further than 4 to 6 weeks ahead, which means that a possible vaccine does not yet offer any prospects. 

Wheat price rises due to hoarding behavior
The wheat market has been stable for a few weeks with prices well above €200 per tonne. Particularly in the third quarter, the listing on the Matif in Paris jumped, prompted by strong demand from countries such as China and Egypt. Due to the uncertainty caused by the corona crisis, these countries want to be assured of ample supplies. The wheat price benefits from this hoarding behavior. The drought in various production regions such as Russia also contributed to this. The possible vaccine has not improved the mood on the wheat market this week, as the price has fallen somewhat in recent days.