There are signals on the European potato market that the solid bottom in the market is moving. The desire to buy is increasing again among French fries producers, but supply of lesser quality continues to be made (especially of the Bintje variety). What market expectations are there?
Especially in France, but also in neighboring Belgium, there is still a supply of lower quality Bintje, which the industry purchases at significantly lower prices (compared to average chip potato prices). The French listing (RNM) announced its last 'normal' price in week 46: €26 per 100 kilos. For low quality, with an underwater weight below 345 grams, a fixed price of €15 is charged.
This also applies to Belgapom, which does not have 2 price works. Bintje with an underwater weight above 360 grams sell for competitive prices. PCA/Fiwap records a very wide price range of €10 to €25 per 100 kilos, which proves the heterogeneity among the Bintje lots.
PAT Index
The bottom of the PotatoNL quotation for French fries potatoes remained at €29 per 25,50 kilos on November 100. From the top, €0,50 was deducted from the price. In Belgium this is €25 to €27, with Belgapom sticking to €25 for the Fontane and Challenger varieties. The recently launched PAT Index (average Dutch price for fries-suitable potatoes) recorded a level of €3 per 27,12 kilos on December 100, based on all business done by the industry.
German market is rising
The German Reka quotation is a few euros above the Dutch and Belgian quotation. It was the only one that allowed prices to rise at the end of November. The Fontane, Innovator and Agria varieties received an additional €0,50 per 100 kilos. This creates a price range noted from €27 to €27,50 for Fontane, €28 to €28,50 for Agria and €29 to €29,50 for Innovator.
It is also quiet on the German potato market. Processors buy few additional potatoes and in many cases German growers have few or no free potatoes in the shed. Yields are slightly better in the south and south-west of Germany compared to Lower Saxony, which means there is slightly more supply here; also because Dutch and Belgian processors also do their shopping at this 'potato crossroads'.
Record due to low quality offering
Potato processors are currently studying their processing strategy better than ever in order to continue operating in the first half of 2019. Many low-quality offerings have led to record-breaking processing figures. In the Netherlands, almost 14.000 more tons were processed in September than in the previous year. The total processed volume of 342.600 tons is even a record for that month.
According to the figures of the French potato organization GIPT 1 tons of the new harvest have already been processed until November 421.000, an increase of 72.000 tons (compared to last year). Potato imports declined. More contract potatoes and free potatoes have been processed.
Influence of the holidays?
The processors scaled up at the start of the new season, only to slow down again later. With the holidays approaching, the question is to what extent the price can take the next step. It is expected that some factories will put work on the back burner for longer than usual (so as not to deplete the raw material supply too much). Next year they hope to manage this with their contracted tons, so that too much does not have to be purchased on the open market.
On the other hand, there is a healthy demand for potatoes and fries. In the third quarter there is usually a dip in chip exports from the European Union. This year the dip is smaller than usual. As a result, export figures over the past 12 months have risen to record highs, according to Eurostat figures. More importantly: the price is also holding up. The average export price moved towards €700 per tonne (September). The price is expected to rise further during the last quarter. The sales price is therefore slightly below last year's level.
Price of fries rises
A chip price that rises to €750 per tonne in the fourth quarter seems feasible. Especially if there is a serious shortage of potato supplies during the first half of 2019, this could have an upward effect on prices. Chip exports to South America recorded a decline of almost 20% in the third quarter, but the Middle East and Asia continue to purchase significantly more product. This keeps the market healthy, despite the anti-dumping duties.
Potato growers probably view such price levels with suspicion. Arable farmers in particular with potatoes that can still be sold freely are of the opinion that the current price level does not meet their expectations. The processors cite the export situation as the reason why significantly higher raw material prices are not feasible.