The futures market of the April 2023 contract closed on Tuesday, March 8 at €20,20 per 100 kilos. This has never happened before in the long history of the potato futures market. It can be concluded from the current price level for the new crop that the world has changed. This is already the case when it comes to the potato sector, but is currently being reinforced by the war in Ukraine.
The war has caused a price explosion on the raw materials market, for example for wheat and corn, which will have a direct effect on the potato market for next season. Assuming that wheat becomes more competitive in terms of pricing versus French fries potatoes, the 2022 harvest year will now be looked at with a slanted eye. If potato cultivation lags behind in terms of costs and price risk in the coming season, this could have a major effect on the acreage for the coming season. year of cultivation and also the following year of cultivation. Although this is way ahead of ourselves, it is certainly an issue for the processors; After all, a lot has been invested in capacity in recent years!
Upside potential
The fact that the futures market price for new harvests now easily breaches the '€20 per 100 kilo' barrier is also logical given the significantly increased contract price level. Hedging for the growing season in the futures market at €20 seems too premature. The upside potential is too great for that. The cost price of potato cultivation has and may continue to increase, meaning that room must be maintained to participate in hedging market prices of €23 and higher. In that sense, a market price trend for chip potatoes for the 2022/2023 season should be between €20 and €27 per 100 kilos.
Making a prediction about market price developments for the coming harvest year is extremely difficult, as there is too much going on in the world for that. The consequences of a war in our backyard cannot be predicted, which quickly turns into speculation. The reality is that there is great uncertainty for all parties, and the uncertainty of the cost price can be suffocating.