Inside: Potato Market
Futures market moves like a frightened mouse
Today, the futures market recovered cautiously. With a lock that was a few dimes higher, the bottom seems to be seen for a while. Still, it was all inconclusive, given the turnover of only 55 contracts.
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Choose the subscription that suits youThe futures market continues to move like a scared mouse and seems unable to rise above the physical market and cash settlement. The lack of buyers in particular clearly illustrates the problem. We have two types of buyers on the futures market;
Firstly, the buyers who buy because they think the market will continue to rise (speculators or processors). Secondly, we have the sellers who want to reverse their position and thus buy back their selling position. Both types of buyers have little desire to switch at the moment.
The hedgers have often sold their potatoes at the cash settlement price and are therefore unable to close their position and wait until the final settlement in week 17. The speculator buyers wait for new impulses before they move again. Naturally, the physical market plays an important role in this.
It adopts a wait-and-see attitude. Most processors report that they currently have no additional need for potatoes. The demand must then come from exports. This is running reasonably well, but focuses mainly on the top of the segment. The Agria variety is especially popular.
So the question is whether the market can go back even further? Given the undervaluation of the futures market compared to the cash settlement of 25,60 euros, this is not necessary. The physical market can of course set a trend by falling. However, the small amount of free potatoes available in Belgium and the Netherlands will not lead to a tsunami of supply from growers who are afraid that they have missed the boat. Developments therefore depend on spring and possible exports to Switzerland, Southern Europe and England.
