The undertone in the potato market was clearly better last week. The positive sentiment is motivated by the expectation of an easing of the lockdown, and yet also the cold spring so far.
Growers with potatoes of good quality in storage are not yet prepared to supply them at market prices that are well below cost price. The storage of the potatoes is generally still reasonable to good due to the low outside temperatures. This reduces the pressure of the potato plug that is still taken into account. There remains support at the bottom of the market from various segments (such as feed and second species), so that a revival can be achieved quickly.
For fries, especially ask for Fontane and Challenger
Belgapom has been trading at a steady level for weeks, but has not (yet) increased its still very low quotation. This week, demand for French fries processing was mainly for Fontane and Challenger. It was striking that there appeared to be no demand for Innovator, while volume still had to be eliminated. The main reason for the limited demand for Innovator is that processors in Northwestern Europe have already largely completed the production for the fast food and food service run. The lower sales in fast food and food service due to corona ensure that there is now enough of the end product in the cold stores.
Futures market shows improved sentiment
The futures market clearly shows the improved sentiment within less than 2 trading days. While the April 6 contract was still traded at €2021 on Tuesday, April 5,80, it was €7,20 at the end of the week. The question now is what the cash settlement will do. Does this follow the rise in the futures market over the next 3 weeks for the settlement of the April contract? The €7,00+ level seems to be short notice in terms of settlement price, but the market may yet surprise us.
The new harvest futures market also continues to radiate positivity with a closing price this week of €17,30. The futures market for the April 2022 contract shows an expected price that is above the contract prices that the processors have been working with in recent months. The open position for the April 2022 contract has increased to more than 2.000 positions, which is ample for this time of year. This could indicate that growers are already taking advantage of the opportunity to start with some futures contracts on potatoes for the coming harvest. Moreover, the persistent reports about the significant reduction in the area in the EU-4 countries for the 2021 harvest support the positive mood in the market for the new harvest.