With the longer follow-up of the potato seasons, it is now known to most stakeholders that from week 27 the market will choose direction in terms of price formation. Is there sufficient acreage in the countries that are important for chips potatoes (the EU-4) and did the conditions for the first part of the growing season go well? In the case of a moderate summer (read: changeable on average in the EU-4), the price trend is generally downwards.
Harvest years to quickly forget were, for example, 2014 and 2017. After a season with a moderate or poor market price, the area in the EU-4 often shrinks and price developments are more positive again. This was certainly the case in the 2018 harvest year, when the potato market rose rapidly to €30 per 100 kilos after a shrinking acreage and a dry and sometimes warm summer, only to remain there for the rest of the season.
This season, the guiding moment seems to have slowed down a bit. It was only during July that there was some mood in the market. With the turn of the month to August in sight, the market seems to be feeling increasingly stronger, as evidenced by the closing of the futures market above the €24 level. The mood is created by the persistent dry weather, where, unlike 2018, it has not been particularly hot for a long time. The drought and its possible consequences (less yield per hectare) will take effect in the coming weeks. In that sense, it is crucial whether, how much and when sufficient precipitation will fall. A number of slightly changeable days in the coming weeks will not be able to replace the drought, which will require a real change in the weather.
As the flag currently stands, the market, and in particular the futures market, has explicitly chosen a direction with a closing position on Friday, July 29, at €24,90 (€25 high!). Less than a month ago, the market with a larger area and hitherto good growing conditions in the EU-4 seemed to be in prospect of a market at contract price level and perhaps lower. This trend has now been broken by mother nature (read: drought), so that a price range for next season of €20 to €22 and €25 to €27 should be perfectly possible. For a slightly higher price range, the soup must be heated a little further.
Factories remain silent
The physical market is also trending steadily (see the Belgapom quotation), but this is not yet reflected in a higher market price. Factories indicate that they currently do not have to purchase anything additional, which is logical given the obligations entered into with suppliers. Currently (end of week 30) the maximum offer for early potatoes is €21,50 per 100 kilos, free of charge. The next price step can be made quickly if the mood continues in the coming week. The game of keeping the ball under water for as long as possible is not feasible for long under the current circumstances.