Despite reports from various parts of the world regarding lower yield volumes of potatoes (Poland, England, America & Canada), the futures market does not seem to be paying much attention to this. For the third day in a row, the futures market drops considerably.
Messages out Poland, England, America and Canada have virtually no influence on the futures market. It is striking that the Cash Settlement (CS) remains stable at €15,30. As a result, the expected value has fallen to the lowest point of this year. The expected value on a futures market is expressed on the basis of the daily market price plus the custody fee and the capital return.
At the current level of the CS (€15,30), the sum amounts to the following: if the custody fee for 10 weeks of storage (week 17) is €0,10 per week and the capital fee is set at €0,25, works out to approximately €16,50. With a futures market at or below €16 you can therefore speak of a negative expected value.
Quiet physical market
Traders and hedgers on the futures market apparently have no confidence in the development of the physical market in the coming weeks. The physical market is therefore relatively quiet. Supply and demand are reasonably balanced. However, more is being offered by growers with poorer storage or quality of potatoes, or patience is running out. Due to the high coverage, processors show little desire to buy and exports are currently too quiet to make a difference.
The futures market will therefore have to wait for a revival in the physical market, otherwise time will do its work.