Looking for perspective in potato market

In both the 2022 and 2023 harvest years, the potato market rose to unprecedented high price levels, especially at the end of the season.

Contract prices have also made huge leaps in recent years, which was more than necessary given the sharply increased costs.

In short, the confidence of growers in the potato market, strengthened by processors who in recent years have done nothing but expand their processing capacity, was unprecedented.

Dent in confidence
However, if we look at the current price development, confidence and the perspective for the next year and a half will take a huge dent. In less than a few weeks, a negative evolution of the market will take place that has only been seen in the corona period. From €30 per 100 kilos for the average French fries potato price in January to €10 at the beginning of May.

The fact is that the season will continue for another two months and that, with the knowledge we have now, the processors seem to be completely out of the market. Even now, in Belgium, no more than €9 is paid for potatoes suitable for chips, carriage paid. Belgapom may be quoting €10 with the mood weak, but buyers at that level are not to be found. In the meantime, potatoes of other varieties are being sold to second types and fodder for less than €3,50 carriage paid. The top-priced variety Innovator was traded this week for €15 per 100 kilos, delivery within 14 days. All in all, a bizarre development, since it is precisely in the last months of the storage season that the marbles are being dealt.

Macroeconomic uncertainty
The export market can be described as quiet and the supply of Egyptian potatoes is in the way. The good start of the new growing season does not help to create a positive sentiment in the market. Where last year a number of processors bought potatoes for €60 to cover the connection with the early potatoes for the new season, there is no interest in that today. Everything is 3 to 4 weeks ahead of schedule and that makes the buyers feel comfortable and lean back. Furthermore, on the purchasing side of fries, people are also very cautious about buying fries. The trade/tariff war, unleashed by Trump, is causing great uncertainty in the (world) market. Container and transport costs are uncertain due to suddenly changing shipping routes, exchange rates are uncertain and are very volatile and with the threat of an economic recession there is fear of a decrease in consumer spending. And this can in turn have an impact on consumption in the catering sector, among others.

Chain reaction
If the potato market for harvest 2024 cannot recover, and it currently seems that way, that is also bad news for the coming season. Previous years are proof of that (graphs for example harvest year 2023 and 2014). The area for harvest year 2025 has again been significantly expanded due to all the opportunities in the previous two seasons. Growers have eagerly made use of the excellent contract proposals. The proof, currently provided, is that too many potatoes linked to the contract price can lead to a huge chain collision in the chain. No market forces and no alternative sales markets where there is room to get rid of surpluses, force processors to continue with potatoes without the sale of the end product.

The futures market is a vivid example of the powerlessness in the market. The futures contracts for the 2025/2026 season are barely traded. At the moment there is supply for April 2026 for €18 (!), €10 below the fixed price contract and there are no buyers for that now. Not from speculators who are betting on a dry summer, for example, but also not from the processing industry. They currently find potatoes of €18 for delivery in April too expensive and come up with a bid of €15.

While this article started with an old saying, it could also end with an old saying: 'If we don't get a disaster, it will be a disaster'. And this is how the fastest growing sector in northwestern Europe stands today.