The ingredients for a higher price were also clearly present in the market last week. The demand is well-founded and the supply is limited, precisely the arguments for a market that can take a step up.
Tension is increasing in the potato market. Buying parties are putting up smokescreens to get their hands on potatoes without causing the market to rise too much. The recipe for this tense market contains three ingredients.
Firstly, the futures market for the month of June has yet to settle. Although there are only over 600 contracts open, many processors also have agreements with growers based on the final cash settlement for the June contract.
Connection old to new
Secondly, the persistent cold plays a clear role. Every potato grower can see for himself that growth in the field is not yet possible, to say the least. This of course especially applies to the early varieties. There doesn't seem to be much going on above the ground, but relatively little is happening underground. A hectare yield of 45 tons per hectare for week 27 will be a difficult story. The puzzle of ensuring a smooth connection between the old and new harvest is not an easy one. The accountants of the various processors will have their hands full trying to figure this out in the coming weeks.
Thirdly, the expected increase in sales of pre-fried fries in Europe in the pre-corona era plays a role. In several countries, the catering industry is already operating normally again and a number of other countries, with the current figures, also appear to be heading for a more 'normal' situation by mid-June. England was out of lockdown earlier, which was clearly reflected in the demand for potatoes. In recent weeks, English traders have been increasingly contacting suppliers of potatoes of above-average quality on the mainland.
Processors run for cover
A number of processors are clearly looking for some coverage for the coming period (weeks 25 to 28), with preference given to Fontane. Prices will be offered at the end of week 19, which can amount to €16 per 100 kg ex grower for delivery week 28.
In the current daily market, prices for direct delivery range from €10 to €12,50, with one processor manifesting itself more emphatically in the market than the other. An attempt is being made to moderate the market somewhat, for example by paying higher prices for delivery weeks 22 to 24 and then loading the potatoes earlier. The quality premium strategy is also applied here and there. A basic price with a slightly higher premium.
Conclusion: the ingredients for a higher market are present. The question is what will happen in the coming weeks and where is the stretch.