The potato market has been under pressure throughout the week. The demand for potatoes has fallen to a minimum and the stricter lockdowns within Europe are causing the processing and sale of chips to stagnate further.
The hope of a further recovery of the market, which was visible in September, has disappeared. With the lockdowns now actually taking effect in Europe, hopes for the season seem to have been wiped out. The lockdown comes at an awkward time. With the holidays just around the corner, the catering industry is now taking a big hit. Christmas and New Year will probably have to be celebrated at home. Traveling (such as a cruise or winter sports) also seems further away than ever. This means that the potato market is declining further.
Belgapom delivers a heavy blow
Belgapom's listing dealt a blow to the market on Friday, November 6. With the reduction of more than 30%, the quotation was reset to €2. A price that is equal to the feed price. The processors report that they no longer have the desire to buy and that they have enough contracted potatoes if the drop in demand for fries remains current. This means that the free potatoes will be in trouble for the second season and once again nothing will be earned. The futures market responded immediately to Belgapom's reduction and fell back to €5,20 with more than 100 contracts turnover.
Belgapom's reduction also has an impact on the cash settlement. This has not yet been officially announced, but the DCA Potato Index is now trading at €3,60. Based on a DCA Spot/Daily Price Index for potatoes (which is €3,60), a storage fee should amount to €7,50 for delivery week 17. However, the demand in the physical market is simply not there. The cold stores are still full due to the government's failed purchasing scheme and due to the ongoing corona crisis, there is no short-term perspective for a recovery of the physical day market.
Harvest 2020 is over
The last potatoes will be harvested in the coming weeks and the 2020 harvest can be concluded. The transition to drying from the shed has already been made by a number of Dutch processors. Some processors even choose to collect contract potatoes early so as not to add extra costs to the potatoes. In short: the potato market is looking for the light in the market, but cannot yet find the light switch.