Inside Potato
Old harvest futures market April above €8,00 from bord
The April 16.00 contract could be traded on the potato futures market until 29 p.m. on Thursday (April 2021). The more than 2.000 contracts that were open after the market closed have been settled on the most current cash settlement of € 8,10.
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Choose the subscription that suits youThe outstanding contracts have been settled at a clearly higher price level than assumed at the beginning of April. The cash settlement (CS) was €6,50 during that period. Expectations went even lower, as evidenced by trading on the forward quote of the April 2021 contract around the €6,00 level.
However, when higher market prices were paid in the physical market and the various quotations (PotatoNL, PCA/Fiwap, etc.) were therefore placed higher, the CS could not fall further. The futures market then rose from €6,00 to €7,00 in a short time. Until mid-April, given the traded volume, the general expectation was that the final CS for the April listing would be €7,30.
For example, a week before settlement, the CS was still quoted at €6,90. But by further listing the physical market in the EU-4 countries, the CS takes a big step up to ultimately reach €8,10.
Due to corona, the 2020/2021 season has been worthless. One that followed the end of the equally bad 2019 harvest season, which dropped from €18,00 to €2,00 in a short time. The highest level of the April 2021 quotation was only €12,60. In the summer months the market dropped back to €6,00. With an 'exit' upwards in the first months of this year (2021) to around €10,00, €6,00 was ultimately the 'incentive' of this trading year to ultimately be settled at the end of the term at €8,10.
An important aspect for the market's learning curve this past season is that the potato market has developed a 'thick' bottom around the €6,00 level. So if the potato market experiences a bad season in terms of price and drops to market prices below €7,00, other gates will open further. Such as those of the second type, feed and starch, which absorb the surplus of potatoes.
Another point of attention is that the market price must not fall so far below cost price again next season, otherwise the potato area for the 2022 harvest year could be hit again. Especially in view of the developments in the markets for wheat in particular.
