Many a trader, processor and grower thought that it was going to be nothing this season. But after the turn of the year, some music will come into the potato market. Are they being pulled along by the other positive markets, eg grain? Is the sales of fries not that bad?
The physical market rose this week towards €5 for potatoes suitable for fries. Occasionally, a little more is even paid, depending on the location of the consignment to the buyer. The demand is not super high, it mainly comes from traders with obligations to the industries or from new demand from Belgian processors.
The basis of this demand is found in the limited availability of free potatoes. The growers with truly free potatoes can be counted on one hand. It seems that the free potatoes that are in the same shed as the contracted potatoes are not for sale.
Lower coverage contracts
The demand from Belgian processors is prompted by the lower coverage of contract potatoes than other European processors. So they still have room to buy more potatoes. A Belgian trader noted that if you only have 60% fixed price potatoes and sales are 80%, you still have to buy 20% more. Due to the extremely low price of potatoes, much more was cleared and spilled than initially thought.
In the Netherlands alone, it is estimated that between 350.000 and 500.000 tons of potatoes have been given a final destination other than the processing for which they were intended. We also see that, just like with the first lockdown, Belgian processors are better able to maintain their production than, for example, Dutch processors.
Smaller recoil
This mainly has to do with the segment on which the processors focus their sales. It is known that Dutch processors focus more on catering and fast food, while the Belgian counterpart focuses more on retail and export outside Europe. The setback in demand is also clearly less than during the first lockdown, where in some cases sales fell to less than 20%.
Sometimes it seems as if the markets are numerically stable, but prices are still rising (see the grain market). This also seems to be the case for the potato. The surplus potatoes seem to have been cleared early, the yield (especially in Belgium) seems to be quite disappointing and sales are 'relatively' not too bad. Even if there is only a small amount of demand, it can have a major impact on the price.
Free potatoes from truly free growers cannot be purchased for less than €10 and co-delivery potatoes are also not available due to the loyalty of the growers to their contract providers and the correct handling of the past season. This gives you the ingredients for a volatile market for the time being.