The wheat market, which feels pricey to firm, has exploded further this week. While €2021 per tonne was quoted on the futures market at the beginning of July before September 200, the first month in terms of settlement, at the end of this week (August 13) that was almost €260 per tonne. What does this do to the potato market?
On the wheat futures market, subsequent months such as December 2021 and March 2022 have also seen significant price jumps. A somewhat less significant increase was seen in the wheat contracts for the 2022 harvest year. However, for the December 2022 contract, for example, almost €220 per tonne was already incurred.{{dataviewSnapshot(2_1628864864)}}
It is generally accepted that the wheat market plays a pivotal role in agriculture. The cultivation of wheat, especially in the Netherlands, has been seen as a closing item on arable farms for decades. The years in which market prices reached €200 per tonne and higher could be counted on one hand. This gave other crops such as potatoes and onions ample space. However, now that the wheat price has reached a structurally higher price level over the past 2 years, this will definitely have an effect on crops that are often grown under contract (read: potatoes).
Keep growers interested
The expectation for the coming growing season is that the contract price of potatoes could increase significantly. Firstly, this means an upward correction compared to the lower average contract price versus harvest year 2020. Secondly, the French fries industry must be able to be competitive with a low-risk crop such as wheat. In large wheat countries such as Germany, France and not to mention Poland, there is a challenge for the processing industries that are continuing to grow in capacity.
A lower market price for initially early potatoes (€2021 per 2022 kg), which Belgapom put on the table on Friday, August 15, is also not plausible for the further course of the 100/13 season. It is already being reported in Belgium that processors in that country want to keep growers in early potato cultivation by offering a better contract price at an early stage (i.e. before the possible sowing of wheat).
Outlook positive
There is interest in potatoes for delivery later in the season. However, this is not yet reflected in large price jumps. The extra impulse (read: mood) of summer weather is missing for this. After all, it is potato weather. The futures market closes at the end of week 32 at €18 for the April 2022 quotation, a price with virtually no premium considering what is paid for delivery from land. For example, on land, Fontane costs €14,25 per 100 kg in the first week of September, decreasing to €13,25 for the first week of October.
In short, in view of developments in the wheat market in particular and the run-up to the 2022/2023 potato season, the market for the 2021 harvest year can develop favorably. The expected moderate harvest in America and worldwide by end product will certainly contribute to this.