Do we still understand the potato market of the moment? There are many questions about how the hares are running on the market. Just think, the growing conditions for harvest 2022 have been far from optimal. As a result, the harvest in Belgium and Northern France in particular turned out to be particularly disadvantageous. And it is precisely in that cultivation area where many French fries processors are located (Aviko just opened a new factory there this week) that a gap will arise in the supply of the raw material.
This also explains why in Belgium and France, where a processing record has been established over the last twelve months, up to €25 per 100 kilos for Fontane is still paid and recorded. For Innovator that is even €26. In Germany and to a lesser extent the Netherlands there is clearly a different price level. The German REKA quoted only €21 per 22 kilos on Friday, October 100, and €23 for Innovator. That is a significant decrease of €2 compared to a week earlier. In the Netherlands, however, a truly lower market price has not yet been seen. At least, if you look at the PAT overview with Ivory Russet for direct delivery for €26 per 100 kilos and Fontane for €25. By the way, batches of Fontane have also been brought in for €22 and €23 for delivery in November. The latter indicates that there is no upward trend towards the end of the year.
Market gives a hyped feeling
The current market gives a bit of a hyped feeling. The Dutch and German processors are clearly taking a wait-and-see attitude. Furthermore, there are clear signals that some parties are well behind in collecting the potatoes. All this certainly does not improve the mood, as evidenced by the sharp plunge in the futures market for the April 2023 contract from €26 at the beginning of last week (week 41) to almost €23 halfway through week 42. The closing position on Friday, October 21, was €24,20. The fact that the futures market is so poorly quoted says something about the willingness of buyers to do business before the first months of 2023. Normally there is a tender at the start of the storage season, but today there is little or no tendering. talk. For this reason, parties look for certainty on the futures market, even if the price quotation appears to be on the meager side.
In short, the futures market appears to be the only buyer and therefore a refuge towards spring. Buyers in the Netherlands and Germany apparently do not care. It is mainly the Belgian processors who meet the raw material requirement as quietly as possible, but do so in an area with an acceptable distance in terms of transport. Transport costs have skyrocketed recently. As a result, driving potatoes from the center or north of the Netherlands to Belgium or France has become so expensive that this is not possible, with a current Belgapom free price of €26,50 per 100 kilos.
Much of the risk flows to the grower
The expectation in the coming period is that the market will come under even further pressure. Firstly, due to the supply, particularly in the south-west of the Netherlands, of consignments that are difficult to store due to rot. Secondly, because the grower is concerned about costs (including energy) and is quickly inclined to make an offer. Money is needed for the coming harvest year and a miss should not happen. In that sense, a special dynamic is emerging for the 2023/2024 season. Contract prices will inevitably continue to rise, but to what price level? The futures market quotation for April 2024 is currently already trading at €22, which is quite special considering the quotation of the current harvest (April 2023) at €24 and what lies behind us in terms of growing season.
What will be the processors' approach for next season? Higher contract prices, that's for sure, but how high and linked to what volume? Ultimately, as is evident again this season, a large part of the risk flows back to the growers. Constructions are needed for the future that reduce the risk position of growers. Not only for the interests of the grower, but also that of the processors. After all, they need raw materials and so the margin must be better distributed.