The harvesting of storage potatoes has continued this week in the EU-4 countries. Under beautiful conditions, the truth slowly emerges when it comes to the yield per hectare, but especially about the quality.
The first reports indicate that things are not going well everywhere or that in some cases they are quite disappointing. It is mainly the Innovator variety that did not get through the growing season very well. Reports of phytophthora in the tuber are often heard. In the field, a number of breeds also report that their underwater weight is still too low. This often postpones the time of dead spraying and subsequent harvesting, which increases the harvest risk.
Ultimately, it is mainly the mid-early varieties that emerge at the bottom of the growth curve. In the case of the later varieties, such as Fontane, Challenger and Markies, an above-average yield per hectare appears to be achieved. And that is the crux for market forces, since the Fontane variety in particular is by far the most dominant in terms of area within the EU-4 countries.
The brakes are off
In terms of market price development, this is an extreme season. After an absolute record in prices, the market has fallen back to far below the contract price and therefore the cost price. The mood among growers is calm, they are happy with the delivery contracts concluded and will see during the storage season what the other potatoes (pool, co-deliver, free) will be paid for. However, concerns are increasing about the future of potato cultivation if the market no longer functions. Making as many agreements as possible in advance (read: contracting) seems to be unavoidable as a market no longer seems to have a middle ground. There is or is a threat of a shortage (think back to the month of July) or there is a surplus, like what we are dealing with today. And that is accompanied by almost extreme price fluctuations.
The middle path mentioned above is the result of the structure in the market that has developed in recent years. The desire for high coverage by processors with contract potatoes, the disappearance of middlemen that normally functioned as oil in the market or as a buffer to absorb shocks, but also the very different harvest years in Europe ensure an 'all or nothing” show. A normal fluctuation in the hectare yield of say between 3% or 5% is apparently impossible to manage for the processing industry in terms of logistics and planning.
The current low potato price is not convenient for the industry. It does not make negotiations about the chip contracts easy. Pressure on the otherwise generous chip prices is certainly not desirable in view of the high contract prices.
Belgium, another world
The price development seems to be taking place more and more in Belgium. Dutch processors have lost considerable control over the market. Belgium largely sets the trend and the rest of Europe follows, that is the new reality. While in the past the Netherlands still had a say in the price trend in the potato market, the rapid growth of the Belgian processing industry has largely lost that role.
The Netherlands actually does not have too many potatoes this season. The area has shrunk, yields in the Netherlands will not reach the five-year average, while processing capacity has increased. This means that all the ingredients are present for a good market. However…
Belgium seems to be growing quite an excellent potato harvest and the potato harvest in France does not seem to be disappointing either. This, in combination with a growing acreage in the countries mentioned, ensures that the mood there has turned negative in six weeks.
The processing capacity may have increased, but it is comparable to making your barn door wider. This increases the capacity from one to two tractors through the door at the same time. However, if you try to go through that door with four hikers at the same time, it still won't work. It would be better to send two hikers through the door every hour. But that requires direction. And that is exactly what the potato market lacks. There is a destination for every potato in Europe, it just needs to be dosed better.
Belgapom recorded €29 today (September 10) with the mood weak. There is a listing, but in fact there is no appetite to buy in the market. A low price does help to bring alternatives to the market, a second type of starch, and so on. It is also striking in the market that potato exports within Europe are going well and at better prices than those of the processing industries.
Difference per breed is greater
While early potato varieties are still hindering the French fries market today and the main harvest of storage potatoes is emerging, it is mainly Fontane's yields that dominate the market. This week, demand for Innovator arose from some buyers. The yield is not that bad, and traders and some growers want to buy some more storage spaces to meet their obligations next winter. But then it turns out that the market is stagnating. Because there is hardly any supply available for Innovator from land in the Netherlands. Bids would have been made up to €18 without an offer. This is in stark contrast to the Reka quotation at the end of this week at €12. Only a few loads were offered from France for €20 free. This further widens the gap in the market. On the one hand, you list Fontane for €10 and you hardly get an Innovator offer. What is the price then?
The futures market remains in reasonably good shape, but turnover is limited. Buyers can be found around €18, but there are hardly any hedgers. This has to do with the fact that many growers have nothing to cover due to the quantity of potatoes that have already been contracted. And participants consider speculative selling below €20 too dangerous given the thinness of the physical and futures market.