In northwestern Europe, few people active in the potato trade had foreseen the reduction of Belgapom (Friday 5 April) coming. This is mainly because a reduction of €5 in 1 week, in this phase of the market, is an unprecedented big step.
The price for Fontane was reduced to €25, which is a decrease of more than 15%. In recent weeks the mood has already been described as 'calm', but trading continued at €30. Trade in the Netherlands is also stable at around €30, which is also reflected in the transactions on the PAT index. The Dutch and German quotations remained stable this week.
Belgapom
How is it possible that Belgapom's listing has taken such a huge step back, without giving any signals to this effect earlier this week? It is a question that concerns many growers. The answer is therefore a mystery to many German and Dutch potato processors and potato traders.
It is precisely in these weeks, which are crucial for the settlement of the potato futures contract 'April 2019' (settlement on April 26), that this has a major impact on the price level of the futures market. It immediately opened €5 lower on Friday April 1 at €27,80, after which it fell further to €26,30. There was also slight panic on the futures market.
Belgapom's reduction appears to have a number of causes. For example, there are rumors that there are potato processors who temporarily close their factories due to a lack of raw materials. In addition, sales of fries on the world market would cool down. Another cause is that there appears to be more supply from growers who want the certainty of a high potato price. The storability, germination and land activities then do the rest.
Sour reality
The reduction is a sad reality, especially for growers. Belgian growers who were previously unable to meet their contract obligations have now been presented with the bill from their buyers based on €30. The fact that the same buyers are now lowering the market by €5 makes it even more difficult to settle the shortage in delivered tonnes.
The growers who still have free potatoes also look around in surprise. Due to the extreme drought and low yields, in combination with very high cultivation costs, the potato price is now also falling. This is extra sad, because Belgapom reported this week that the limit of potato processing 5 million tons has been broken through in Belgium. According to the growers, these facts do not match the move that Belgapom's listing made on Friday, April 5.
Surrounding countries
The question now is what surrounding countries will do. Will they go along with Belgapom's reduction next week, or will they continue to pay last week's prices (approximately €30). Many growers will now first go into the country to plant, after which they will then worry about the market again. This often means that supply dries up and the market stabilizes again.