Corona apparently has little grip on the potato market at the moment. There is sufficient support in the futures market for a solid floor that the quotation will not fall through. On the physical market, quotations even cautiously rose this week.
The early corona press conference to be held tonight will not have a major impact on the potato futures market for the time being. This is in contrast to the press conference two weeks ago. Then imminent measures caused a sharp fall in the price. Compared to the top at €18,60 last Thursday (November 18), the price has indeed lost a bit, but €18 is currently a hard bottom in the market where the price remains at.
On the physical market, the quotations actually rose. PotatoNL's average chip price has increased by €0,50 this week to €16,25 per 100 kilos. Even the Belgapom rose for the Fontane listing from €12 to €13 per 100 kilos. It is therefore the first time this season that there is movement in this Belgian listing. They keep the mood price-keeping, in other words the supply is less than or equal to the demand.
In terms of odds, another remarkable thing happened this week. The cash settlement price was published before the close of the market. Most growers will not notice this, but premature publication is highly unusual in the financial world and practically never occurs in the potato futures market.
Shift in coercive supply
The compulsory supply of potatoes from the field or from temporary storage is drying up. This will only be replaced by offers from parties with problems - mainly rotten. Some insiders try to downplay the magnitude of the problem, but it at least looks like some pretty serious volumes. For example, reports are received that laundries are reaching maximum capacity and some of the problem batches are therefore given a different destination than French fries. That does not fit in with the strategy of the chip processors, who try to attract as many potatoes as possible.
Is the market right?
An old stock market saying goes: the market is always right. Does that also apply to the potato market at the moment? A frequently heard complaint among growers is that potato prices should actually be at a higher level. Farmers have always been complaining about prices that are too low, but now they do have a point if you look at the developments on the market.
Processors are running at full speed and if you offer (good) potatoes now for delivery in the coming weeks, you almost have to be careful that the trucks are not already in the yard tomorrow. In addition, the potato harvest in the EU-4 is smaller than last year and most likely some of the gross harvested tons will still fall off. And although the concerns about corona are justified, we saw last season that potato sales do not have to suffer. This provides a solid foundation, as the futures market shows.
However, the industry can largely manage with contract and co-delivery potatoes and supply from parties with problems. Moreover, the industry has no interest in increasing prices much. Whether it will also be possible to keep the market under control in the second half of the season remains to be seen. To stay in stock market terms: the potato price on the futures market seems undervalued.