Inside Potatoes
Potato market too quiet for time of year
The market this week was dominated by the CBS harvest estimates. Often these harvest figures are a reason for the market to make a move or to create a stir in the market. However, the market did not detract from it, which is striking for the current high price level.
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Choose the subscription that suits youHigh price levels usually indicate high volatility, but now the market seems set in stone. This means that the market reacts differently than in previous years when there was a shortage. In 2006, for example, the market jumped up at this stage of the season.
What does this say about the current market?
The potato price is mainly driven by supply and demand, and mood and expected value are also important. In 2006 the price rose due to the observation of glass potatoes. As a result, part of the harvest was lost.
There is also glass this season, especially at Bintje in Belgium. Growers offer their potatoes because they are afraid of storage problems. The high dropout rate and the extensive work (salt bath) mean that the price of Bintje has dropped dramatically (Belgapom notes €15).
The offer is large and late no space to other varieties to increase in price. Where 2006 showed expected value in the futures market price, today's futures market does not show this. The uncertainty among the participants is too great.
Uncertain market
How will the Cash Settlement turn out and how will Belgapom position its listing for Bintje? These are all questions that must be answered in the coming months. This uncertainty makes buyers cautious in the futures market.
The strategy of the processing industry makes the market uncertain. They know how to keep the market calm by not giving demand, but by waiting for supply from parties with (quality) problems. Will they put the processing on the back burner if the chips price does not increase with the potato price? In any case, it is a fact that they are currently the largest owner of potatoes.
At a contract volume of 70% and a loss of revenue of 23% (figures from the CBS) this means that they already own 90% of the potatoes. The battle will then be for the last 10%. Will they do this or will they wait until the end?
Wait and see attitude
At the moment, a wait-and-see attitude is being adopted, which makes the market feel 'lazy and expensive' and is actually too quiet for the time of year. The transition from the off-land period to dry from the barn could also lead to a movement, but there are no signs of that yet. The market is therefore waiting for an impulse, apparently the CBS figure was not.