Green light for further rise in potato price

Although not all potatoes in Europe have been grown yet, the growers concerned have now really given up. British potato growers report that they will first go on Christmas break (clean and repair the machines), and then wait to see what winter will bring. If it is soft, they will probably make another attempt in the spring. At least, if circumstances allow it.

Traders, processors and exporters are now counting their buttons and looking at what is in stock. They also look at what quality is usable, and for what final destination. It is clear that the cards are different than a few months ago (before the harvest period).

Harvest damage
In Europe the harvest has taken a huge hit due to the wet autumn. A small portion remained in the ground, with England expected to have suffered the most damage. As Previously mentioned, it is estimated that in the EU-5 (particularly in England) 500.000 to 700.000 tonnes remain in the ground. In addition, some of those potatoes will no longer be suitable for the purpose for which they were grown. This means that the final destination must be shifted, such as export, chip and/or flake industry. In the Netherlands there are also reports of rejections at the moment, which indicates quality problems; especially in terms of frying quality and too low underwater weight.

If the situation in the most important countries (Netherlands, Belgium, France and Germany) is analyzed, there are a number of observations that could influence the mood of the season. In Germany, the final acreage figures have been adjusted, making the total harvest smaller than 10 million tons. There were quite a few comments on the first estimate of the area, and it now appears that that estimate was too high. A German harvest of less than 10 million tons is statically favorable and is also well received by growers.

France could well become the floodplain for the potato market for the second year in a row. Due to its significant growth in acreage, the country has the third largest potato harvest ever. The average hectare yield on the other hand, is lower than the 5-year average, which may be a reason that growers in the country are reluctant to provide supply; especially now that the market is trending slightly higher. However, this will not be a problem for the coming weeks, as processors still have sufficient contract potatoes.

In the meantime, the processing potato industry in Belgium is accelerating considerably. The fact that the daily price remains around €13 has to do with the availability of contract potatoes. In addition, all potatoes that are difficult to store (due to their quality) have a depressing effect. The Belgians are also active buyers in neighboring countries to keep the home market calm.

Ask for long potatoes in the spring
In the Netherlands we also see a stable to higher tender market. The Dutch processors are less up to speed in terms of processing than their Belgian competitors. This can be deduced from the processing figures and export figures. Nevertheless, the Dutch factories are excited about a larger volume in 2020. After all, there are plenty of opportunities on the global market for fries; especially considering the problems with the largest competitor on the market: the United States. The American potato harvest is at its lowest since 2011, which is an interesting fact. This is because the Americans have invested heavily in processing capacity in order to meet the growing world demand for end products.

In Europe, processors seem to see an opportunity in the need for end products with fast food as the final destination. All potatoes of the desired varieties (and especially those with length) are currently in demand. This week, Marquis and Innovator (based on a tender among regular growers) traded at €18 per 100 kilos, delivered in April. €17,50 was paid for Fontane. Given that the total volume is not really large, this indicates that growers who do not use tenders are voted at €18.

This also applies to the customers. It is also clear that buyers are looking for varieties for the fast food segment (such as Innovator and Markies) for delivery in spring 2020. In this way they hope to meet the demand and the expected additional demand.  

What will the market do?
It is a given that the potato market is thin and that supply and demand balance on a thin string. Processors can continue to balance for a long time due to the large volumes of contract potatoes, but they are also nervous. Especially when there is additional demand in the market. Demand is expected from England in the new year and then the market can change quickly.