The year 2019 will go down in the books as an eventful year for the potato market. That in itself is not illogical, since 2 cultivation seasons flow into each other.
The 2018 harvest year, which ended in mid-2019 in terms of season, had an extreme price picture with market prices above the €30 level. For example, the futures market for the April 2019 contract quoted €3 per 33 kilos in January (week 100). Towards March the market fell again a bit, to €26,50, eventually settling at just under €28.
Market rule of harvest year 2018
The tail end of the 2018-2019 season was a bit more steady again, with market prices well above the €30 level. For example, the June futures contract settled at €31,20. If we look at the situation in the 2018 harvest year (with a very low average potato harvest in all EU-5 countries) and the eventual price development, we can conclude that €30 is a hard upper limit in the potato market. A large number of arguments must coincide if the potato market is to reach a price level above €25. Let alone get stuck there.
In any case, the very exceptional price movement in the 2018 harvest ensured that the EU-5 acreage grew for the fourth year in a row. However, after a year of high prices, the market cannot easily be talked down to and it does not take much to continue the upward trend in the new harvest year.
Waning confidence
Due to another dry summer period, the futures market for the 2019 harvest quickly rose above the €20 level. However, the jump, as was the case a year earlier (above €25), was not made. The growing conditions were not always optimal, but subsequently turned out to provide a reasonable potato harvest in the EU-5 countries. Especially in August, confidence in the market had completely disappeared in a short time. Due to the larger acreage and the uncertainty about the European average potato harvest, the futures market fell back to as much as €11,50.
The doomsday scenario of the 2017 harvest year came into focus. Then, due to a large average European potato harvest, the market fell back to well below €10. However, in the end the soup was not eaten as hot as served. The potato harvest in the EU-5 countries did not reach the multi-year average and due to the gap created after the 2018-2019 season in the stocks of end product, there was no buffer. Furthermore, there was high demand at the bottom of the market, from the starch segment, second type and export to Eastern Europe.
Cash settlement
After the significant dip in the market in August, the market started to move upwards, causing the futures price to rise again to an average of €16,50 during the harvest period. When the harvest in England was difficult to say the least, and a comparison was made with the 2012 harvest year, the potato market (both physically and in term) rose slowly but surely. For example, the last contracts on the futures market of 2019 traded at €18,70 and the most current cash settlement was quoted at €14,20. Although the potato market is clearly making an upward movement, this is not yet really reflected in the CS. Due to the lagging behind in the quotations in Belgium and France, which are used to compile the CS, the market appears to be difficult for the time being.
The expectation for the first half of 2020, and the extension in terms of price formation for the 2019 harvest year, is positive. The general idea is that the price should be able to move between €15 and €20, with the England factor still hanging above the market. Significant demand from England is likely, but this is not expected immediately at the beginning of 2020. In addition, the demand for varieties such as Innovator and Markies (top segment) will be high. The supply of the much sought-after Innovator variety is limited, partly due to the disappointing harvest in Wallonia. A market price of approximately €20 should certainly be possible here. This also applies to a variety like Agria, which is popular in the higher export segment. This question persists.
Weather has the final say
In short, just like in previous years, 2019 was an eventful potato year. On January 1 it can never be predicted how the hares will run. In that sense, the weather is always the determining factor and we now know that the weather is unpredictable!