In October and November 2020, no one thought it possible that prices on the potato market would show double numbers again a few months later. This shows once again that markets are unpredictable and sometimes unfathomable. And are driven by emotions.
The futures market rose above €10 today (Wednesday), driven by the physical market that is still looking for potatoes to buy freely. The drivers behind this market are German and Belgian traders. Because sales of fries are still above expectations, chip producers are looking for potatoes. Mainly to potatoes for immediate delivery and for March. This allows processors to push back their contract positions slightly, so that they can continue to use old potatoes for longer in the current season. The shrinkage of the area of early potatoes plays a role in this strategy.
Alternative sales channels
In retrospect, too many potatoes were cleared too early for alternative sales channels. This was also motivated by the extremely low price that processors were willing to pay (€3,00). This brought the price below the prices of sales channels such as starch and flakes.
Today everyone is keeping their cards close to their chest. While many people spilled the beans in October and November, the market parties are now being extra careful with their positions. In fact, the factories are the major owners of potatoes and they should have offered their 'excess kilos' to processors from other countries. Yet this does not happen, which may be an indication that sales in the Netherlands are also exceeding expectations (but certainly not yet at 100%).
Growers do not offer
Growers are also not prepared to offer. This is mainly because growers have few or no free potatoes to sell (and it is only February 3). All in all, an exciting cocktail in the market, which now clearly shows market forces. Whether there is room for even higher prices depends on buyers who are (forced) to seek cover for their sales position. Spring can also be the executioner.
The fact remains that much higher prices are currently being paid for (physical) potatoes than the quotations show. This has created the expectation that quotations can make significant increases in the coming weeks and thus the cash settlement, which also explains the upward trend of the futures market.{{dataviewSnapshot(2_1612367861)}}