The potato market continues to feel strong this week. Demand for potatoes remains good and supply remains limited. Now that the first three weeks of the new year are behind us, the upward trend in potato prices seems to remain intact.
Something that historically often happens in a market that increases strongly after the off-land period. It is beginning to look like the off-land periods structurally have a completely different dynamic than the period in which deliveries are made from the barn.
New growing areas
This dynamic is fairly easy to explain because the growth in potato cultivation in recent years has mainly taken place in new areas and there is often no initial investment in storage. In addition, processors seem to increasingly misjudge when it comes to the connection between the old and the new harvest.
The stocks in storage also regularly have surprises. Something that has already cost a number of processors a lot of money. In the last two years, the last old potatoes were bought for €60, while six weeks later there was a surplus in the supply from the field. Starting the new harvest later also has consequences for the course of the period from the field, because there is no room for extra supply logistically.
Fixed mood
The current daily market feels stuck and there seem to be few arguments for it to drop. The supply is very limited and growers are holding on to their potatoes. Compulsive supply has disappeared from the market and with that the price seems close to a next step towards €30 as a bottom.
The first growers are now reporting with sales transactions of €30 for Fontane, delivery in January. The German market is well ahead in the increase. Today Reka listed €27,50 for Fontane, but Agria and Innovator are also making another step up of €1,50 towards €33,50 for Agria and €37,50 for Innovator respectively. The futures market is also looking up. At the beginning of the week the contracts were still traded for €32,50, on Friday 24 January €1 was added and the market closed at €33,50.
That Germany is so steady is remarkable because the German CBS reported in November that Germany has the largest amount of potatoes in fifteen years. Growers reported then that the yields were disappointing, but due to the negative sentiment in the off-land period these sounds were not taken seriously.
Belgium follows its own course
Belgium remains the odd one out in the listing world by not joining the increase and once again stoically listing €25. It was reported that the mood is set. It seems that Belgian processors are benefiting from the growth of potato cultivation in France and are therefore better able to manage their demand than other processors in other countries. But it seems that Belgium will also have to make a jump in the listing. Given the sentiment, the demand and the limited supply, a step towards €30 at the bottom and €40 at the top will not be long in coming.