Upward pressure on potato price growing

The futures market ran last week continued on and has been trading above €5 for the past 6 months. The long, deep and dark period in which the market has been, now seems to be slowly opening up room for light in the tunnel.

Badly storable batches
The recovery in the market has a number of reasons. Firstly, the market has seen a lot of pressure in recent months, due to bad storable parties. These parties put constant pressure on the market. In addition, the yield of the potatoes is so abundant that many processors had no space to process additional potatoes. This pushed the market even further away.

Compulsory offer no longer seems to be an issue. This is partly because bad parties now find their way more easily to, for example, Avebe and other starch processors. As a result, the lower end of the price range has clearly become stronger.

Growers' Reluctance
The second reason for the market feeling slightly better is the reluctance of growers to supply at low prices. The potatoes that are still in storage are easy to store (due to the weather conditions) and they are generally of good quality. This means that the grower is in no hurry to supply at low prices.

If the daily market offers €4, there is little willingness to open the barn doors. The idea is that the potatoes will also yield at least € 6 in 4 weeks, so that gambling is done with little risk. The downward price risk is therefore perceived as nil.

Spring weather
The spring weather also contributes to the slightly better mood. The first early potatoes have now been planted, but that is not much yet. In addition, the different weather reports still changeable in the short term.

Southern Europe has one of its wettest and coldest springs in the past 10 years. There are concerns whether enough potatoes and vegetables come from to ensure the connection with the new season. The fact that the carrot price exploded in recent weeks is an indication of that.

little movement
The chip factories are reluctant to participate in a higher potato price, but the impulses are limited. It Platform Potato Transactions (PAT) shows little movement for now. Most potatoes are still traded at €3,50 to €4. It should be noted, however, that this mainly concerns co-delivery potatoes.

You do see that processors show a buying interest for delivery later in the season. In the PAT-overview became this week Fountains traded at $5 and Innovator at $7,50, a hefty custodial fee compared to the current day market. Innovator (direct delivery) goes for €4 and Innovator (April delivery) for €7,50. That can safely be called a significant price jump.

(Text continues below the chart)The PAT overview shows the potato transactions between growers and buyers.

Market Expectation
The battle is currently in the numbers and the expectations of the market. In figures, there should still be plenty of potatoes until the end of the season, but can they be bought at low prices in the short term?

Another question is whether processors can manage their positions enough to make it to the end of the season without clearly asking the market. Shifting contract positions, qualities and varieties is crucial in this regard. In any case, it is clear that (at these low price levels) a little extra demand leads directly to a significant price increase.

The April contract on the potato futures market over the weeks.

The closing price for the April contract on the futures market shows an increase.