132% expected value in the potato market

It is already noticeable that the tension is decreasing. As the harvest progresses, more and more harvesting capacity is becoming available for the last plots. Some growers have finished harvesting and are helping a colleague, to name but one example. What the final total harvest in the EU-4 will be, remains shrouded in mystery. The differences in yield and quality vary greatly per country, region and plot. Planting date, soil quality, rain damage and variety are also determining factors for the tonnes that are harvested above ground.

Pricing
The price formation is also affected by the circumstances. Belgapom was listed at €12,50 for the eleventh week in a row, with the mood changing from stable to holding for the first time this week. Whether this is an omen for a movement of the Belgapom remains to be seen in the coming weeks.

For Dutch growers, the price of potatoes remains shrouded in a thick fog. Due to the lack of the PotatoNL quotation, only the Belgapom can be looked at and with that the Belgian processing quotation has become leading in Europe. Whether and when there will be a PotatoNL quotation remains unclear when asked to the parties. And with that, the Dutch grower pays the bill.

Expected value
What is very exceptional and striking about the potato market is the high expectation value and therefore the price difference between the daily market and delivery in the future. Delivering your potatoes from the field today for €12,50 or selling them for delivery in April 2025 for €29 is an expectation value of 132%! A percentage that has not been seen before. In short, buyers and sellers expect the price of potatoes to more than double in half a year. 

The big question is: is the daily market too low or the futures market too high? That answer is difficult to give. The fact is that due to the late start of the harvest season and the resulting high coverage of the processors, the daily price of free potatoes has fallen disproportionately hard and there is insufficient demand due to a lack of logistical space.

We now see smart growers buying potatoes in the Netherlands from Germany for €17 to €19 delivered home, to then resell them on delivery in April for €28 to €30. The expected value is mainly based on the pricing of the past years (expensive years), the high French fries and contract prices and the extreme costs that growers have had to make for growing potatoes.

Remarkable
The futures market experienced a special day today. With a turnover of 120 contracts, a new record was set after the BinckBank/Saxo Bank era. ADM is now the largest party active in clearing and brokerage. Parties are slowly becoming active again. Something that makes sense if you look at the expected value. Growers and traders are looking for cover at these levels, but buyers also continue to report to the futures market despite the expected value.

Processors do buy potatoes from growers for delivery in April, but then specific varieties such as Innovator and Markies. Varieties that can easily be sold in the higher French fry segment. The uncertainty and faltering in the market is also largely caused by the French fry market. This is characterized by moderate sales and growing stocks at processors.

Individual positions of processors also determine the behavior in the market. For example, there are processors who work with a surplus of raw materials, but also processors with room for extra raw materials. The bottom seems to have been laid in the market for the time being, but whether and when the price jump from the daily market price to the expected price will take place, remains to be seen.