While the world is still deep in a corona crisis, the price of potatoes for next year seems to have a very positive sentiment. How special is the start of the new potato season?
The potato market is still busy clearing the potatoes from storage. While potato growers are busy getting the new potato harvest to the ground, the futures market for April 2022 is hitting a new record. Never before has the futures market been so high at this time of year.
2019 is over
In recent years, 2019 was the leader with a peak of €16,80 in the first 16 weeks of the new year. The 2019 harvest got off to such a positive start due to the high price of the 2018 season. That was the year in which price records were broken due to a completely failed harvest in Europe due to the longest drought since 1976.
Today there is a completely different starting position. The price has been significantly below cost for almost 1,5 years. Processors therefore chose in January to reduce the fixed contract price due to the collapse of French fries sales due to the closure of catering and food service. For now this seems to have been a wrong choice. Growers responded to the price drop by reducing the area of potatoes and signing fewer contracts, because this is below the cost price of the average grower in Northwest Europe.
The area as a game changer
The acreage in particular seems to be the game changer and the most important ingredient for the record quotation of the new harvest. Today the futures market touched the €18 level, something that has never happened in this time period in the past 10 years.
Cold spring
Another cause is the persistent cold weather, which means that early potatoes may produce fewer kilos and become available later. The expectation that when the lock down and the pandemic is over, the demand for fries could break all records also gives a positive mood for the new season.
Incidentally, the starting position of the land today is many times better than last year. While last year the structure of the soil was very poor and very difficult to work with, it is now very beautiful (due to the winter).
For growers who have signed the lower contract prices, the high futures market is extra harsh, as they could now have hedged their cultivation on the futures market at cost price plus. {{dataviewSnapshot(2_1618913813)}}