The potato market got some air this week. As a result of 2 news items, the futures market shot up again towards the level of €6. Which 2 news items were these?
First, there was the announcement by the pharmaceutical company Pfizer about the impending availability of a corona vaccine. Something the world has been waiting for for a while. The international stock markets rebounded by 10% as a result of this news and a company like Lamb Weston recovered by 24% in half an hour on an American stock exchange. The hope for a normal world and the reopening of the catering and events industry gave the market wings.
PotatoNL listing
Secondly, the futures market recovered towards a level of €6 due to the PotatoNL listing. The 'category II' quotation of €6 to €9 gave a boost to the futures market. This quotation subsequently caused quite a stir in the market, because this quotation deviates so much from what is actually happening in the market. This quotation of up to €9 is said to have come about as a result of a transaction of the Bintje variety. These prices are not paid anywhere in the market. In short: the buyer of this lot has significantly changed his wallet compared to what is currently happening on the market. Something that was confirmed by Belgapom's quote for Bintje: €2, with the comment 'weak'. The futures market therefore proved impossible to maintain at the level of €6 and fell back to €5,50 in the following days.
The Belgian potato market is currently the weakest. The supply of potatoes is large and the processors show no desire to buy. The first potatoes are now also offered 'dry from the shed'. In Belgium, about 15% still needs to be harvested, but the first harvested potatoes are already offered for prices around €2. Belgian growers say they have no confidence in market recovery and are now about to invest in sprout inhibitors for the first time. But because these costs are high, farmers do not want to incur these extra costs and empty the barn against any reasonable offer.
Uncertainty
Traders and processors are therefore concerned about the next 3 months. Demand will not increase in the coming months, because it is not expected that the demand for fries will recover quickly or the lockdowns will be relaxed. This makes price expectations downright negative. Growers who have their product in the shed will have to decide in the coming months whether or not they will add extra costs to their product.
If the grower has not done business off the field for €3, he will still have to collect at least €5 in January/February when administering any sprout inhibitors in order to be able to recover the extra investment. If this perspective is not available, growers will choose to empty the barns early. As a result, the market will come under further pressure as a result of compelling supply.