The quote for the April 2023 contract has closed at €30 for the first time this season. Although it has traded at €30 before, the previous highest closing level came in at €29,90. The question that now arises is: is there more in the barrel? Read: can the futures market quote be even higher?
Given the long way to go before settlement of the April futures contract (13 weeks), a futures market that seriously exceeds the level of €30 per 100 kilos (think of €33, for example) is certainly not inconceivable. The current cash settlement (CS) for this week 4 was not yet known when this analysis was compiled, but according to the already known quotations it will amount to approximately €27,70. That is a margin of almost €2,50 with the current closing price of the futures market.
The price difference between the CS and the closing price of the futures market will continue to converge over the coming weeks. This means that the physical market and therefore the quotations and therefore the CS must be taken to a higher level. So, for example, if you end up with a settlement in week 17 for the April contract at €33, then the physical market still has to make significant progress. The Belgpom quotation must then rise to at least €32,50 in April, which in itself is not a giant step. It is expected that €30 will soon be put on the board for Fontane and Challenger, PCA/Fiwap already recorded €24 per 30 kilos at the top of the range on Tuesday, January 100.
Pink balloon
The expectation is that the market will rise further, but this 'pink' balloon is often punctured. In the extremely dry harvest year of 2018, the futures market rose to almost €6 until week 2019 in 33,00, before falling back to €27 in March and April. The April 2019 contract was settled at €27,50. In the coming months, and certainly in April, many potatoes will still have to be paid for at the then current prices. So the need among buyers must be really high to allow the market to slip (far) into the €30 range.