With the extreme weather conditions in a number of important growing areas, the futures market and the physical potato price should be firm and upward. Yet the market does not want to rise. Both for the last old potatoes and the futures market for the new year. What is this about?
1. Resistance at €25 per tonne
Despite the very low yields and enormous extremities that characterized last season, the record processing and good fries sales, the market does not want to exceed €25. This level appears to be the new ceiling, where previously prices of up to €40 were paid in shortage situations. The large quantity of contract potatoes means that processors operate on the market in a more controlled manner. In the past, it was often traders who caused commotion to cover sales obligations.
2. Interchangeable varieties
Interchangeability of different types of varieties means that the buffer for processors has increased. In times of scarcity, dual-purpose varieties, export potatoes, table potatoes and oversized seed potatoes are also used.
3. Better processing processes
Continuous improvement and optimization of processing processes ensures that processors can process more and more different qualities into fries. While in the past only 50 mm upwards of certain qualities and varieties could be made into fries, much more is now possible. This is also visible in the flake market. In the past, there was often substandard supply, rejections, browning potatoes, blue points, and so on. Last season there was actually no offer of the second kind. Everything that is driven into the factory gate does not come out. Specialty lines, our own flake lines, advanced intake lines, blending and electronic sorting installations mean that a lot is possible.
4. Cultivation on sand is increasing
Potato growing areas are continually expanding. In the original cultivation areas (the Netherlands, Belgium and Germany) we see a clear shift to other areas. Other soil types that were not considered suitable for growing potatoes in the past are now being used. Other varieties and further increased mechanization mean that new growers are being added. And with a transport of 300 to 400 kilometers from the processing industries, this ensures that the buffer zones are increasing. There is a significant increase in the cultivation of French fries potatoes in Northern France, Belgium is growing enormously in Wallonia and the Netherlands is seeing strong growth in cultivation in the sandy areas. It's just like a river, the larger the floodplain, the less chance of flooding.
5. Table potatoes less popular
The table potato segment continues to shrink. Fewer and fewer people are eating boiled potatoes, which is putting pressure on the market. These 'surplus potatoes' can partly be sold in the export market and to fill gaps in other markets. Due to the large quantity of contracted chip potatoes, there is a chance that in the event of a possible shortage there will be a run on the available chip potatoes. However, if it is not driven by the export market (from Switzerland, England or Russia, for example), the market will continue to see its top at €25.
It remains a natural product and the potatoes do not grow under a roof. This means that it remains the most important merchant. But the fact that the market structure is changing seems to be an irreversible process.