Analysis Potatoes
Cautious exploration of demand on the potato market
An old stock market wisdom is: never catch a falling knife. The potato price also seemed to suffer from this in recent weeks. A very short period of reductions in the various potato quotations caused a lot of unrest on the potato market. In addition, there is surprise and incomprehension about PotatoNL, which also remained relatively high in week 11.
Would you like to continue reading this article?
Become a subscriber and get instant access
Choose the subscription that suits youThe difference with the average prices in the countries surrounding us (Germany €19,50, Belgium €17,50 and France €18) and PotatoNL is bizarrely large at over 25%. For example, last Monday, March 9, PotatoNL even quoted slightly higher for category 2 and fresh fries than a week before, while the current market was heavily underwater in terms of market price.
Big difference
The question that can be asked is: what value does a listing have, certainly for the Dutch market that is so far outside the actuality of the market (read: lines). For Dutch growers who deliver kilos based on the average PotatoNL listing it is a stroke of luck, because they receive an average of €7,50 more than their Belgian colleague who was settled on the Belgapom listing.
The potato price is not looking very cheerful this week either. Quotations continue to fall, with Viaverda already quoting an average of €16,25. Until halfway through last week, there was no demand to be found in the market and a buyer for regular chips potatoes was almost impossible to find. Now, at the end of the week, there seems to be some light at the end of the tunnel. Belgapom quoted €17,50 today with the mood 'calm' and was therefore unchanged compared to last week, which could be the first signs of stabilisation.
The first transactions are also being reported where buyers are cautiously exploring the market by placing bids for the period April and May. Growers are sensitive to this. An early spring seems to be coming and being able to find a buyer in a declining market gives a somewhat relieved feeling.
Futures market
On the futures market, the decline in potato prices and the loss of physical demand caused a further decline in the price level, with the market falling to a close of €20 on Thursday after the announcement of the cash settlement (€1,70, minus €20,70). The graph below shows that a bottom has been emerging around €20 in recent years.
Today a tender was put on the market for delivery April (week 17) for the Fontane variety suitable for fries for €20, and last week deals were also done for Fontane delivery May for €20. Whether buyer and seller did the right thing, time will tell, but for the market it is positive that after weeks of little to no demand, it is now slowly recovering.