The potato market has gained momentum in the past week. While it was difficult in the period March and April with regard to price formation, the settlement of the April forward contract in week 17 seems to have given the market wings.
Belgium continued the trend last week by increasing the Belgapom by €2 to €22 per 100 kilos, but today it went a step further by increasing it by another €3 and recording €25. These are big steps for the potato market, also from a historical perspective. It is difficult to explain where this increase suddenly comes from, while the market was stable in previous weeks. It is suspected that Belgian processors do not have their position in sufficient order and, especially for the last period, May and June, still have to go to the market to buy potatoes. The low stock of potatoes in Belgium also plays a role, which, together with the later availability of early potatoes, can easily leave a significant gap between the old and new season. Exports were also going well four weeks ago in Southern Europe and partly in Eastern Europe and prices had been rising there for some time.
The supply was limited and the expectation was that there would be more supply, especially in the Netherlands, after May 1 due to the expiry of the TVL scheme (Reimbursement of Fixed Expenses). Growers kept their storage areas closed so that they could still use the TVL. However, the supply seems to be limited and apparently people in Belgium could not buy enough fries-suitable potatoes for €22 to match the good demand for pre-fried product. Inventories are low (9% lower than this time last year according to PCA data) and there are especially few free potatoes. Growers with free potatoes want a (very) good price for their product and do not let go easily.
The market is also growing easily in France. Export demand is always noticed a little earlier there (transport costs to Southern Europe are lower) and the RNM also increased its price to €23 this week. Germany seems even more settled, especially for Innovator and Agria. Reka today recorded €26 for Innovator and Agria and €24,50 for Fontane and Challenger.
The Netherlands follows with difficulty
The Netherlands has been leading the way in music for some time with higher prices than neighboring countries, but is now struggling to keep up. This week a transaction of €21,75 for Fontane was reported on the Pat, which is €3,25 lower than for Belgian Fontane. This grower might have been better off calling some Belgian traders and processors to arrive at a substantially higher balance. In the Netherlands, up to €25 is also paid for good Innovator, although the Dutch processors seem to have a more generous position than the Belgian processors.
Another sentiment that plays a role is the drought and cold. If the early potatoes are delayed further and the yield is moderate, the processors' need for old potatoes will increase further. Prices of €30 for Agria are now also reported. These do not end up in the fryers of the Dutch and Belgian processors, but are sent for export. Although with these rapidly rising prices, a number of countries seem to be dropping out (for the time being).
The weather may well determine the further development of prices in the coming weeks, something we see in the new crop futures market, which reached a new high of €23,40 this week. And that is a record price for this time of year on the futures market. The drought that is now emerging early seems to have more impact on the market than expected. The nice weather is driving the demand for fries, while the early potatoes are barely growing.
In summary, the trend is being set by Belgium, where it was done by the Netherlands in the last decade. This role of the Belgians is underlined by, among other things, paying €30 for Marquis, delivery in June.