While the futures market opened at €22 on Monday, July 20 (due to the weather forecast and lagging growth), it closed at €25 on Thursday, July 18. In a historic week in terms of weather, this still raises eyebrows among futures market participants left and right.
Today, on the hottest day ever, the futures market drops €1,70 with a turnover of 407 contracts. Sellers and hedgers continue to make offers on the futures market, afraid that the potato price will drop below cost price. Confidence in a normal to reasonable potato price is very low, especially among growers.
This lack of trust is mainly based on three factors. These are the area growth, the large number of fixed price contracts that processors have concluded and the price development last year. He just wouldn't break the €30 mark, despite the shortage of potatoes. But is this suspicion justified?
Separate facts from emotion
Markets are always right and supply and demand determine the price. But facts must also be separated from emotions. And that is difficult at this stage of the market. Europe is suffering from the hottest period ever. The most important potato areas have been experiencing extreme drought for a long time.
We can therefore say that the chance of a harvest comparable to the 5-year average continues to decrease. The potato plants are damaged. The first test ewes show that current yields are not much higher than those of last year in this period.
Save the harvest
Can the expected rain in France and Belgium this weekend save the harvest? The growing season is still long, the plants have taken a big hit and the flush induction has also taken place in this heat. So one shower is not enough. A structural turnaround should then ensure a final sprint in growth.
The question is whether the plants are still vital enough after this heat. However, the market thinks so. Fear reigns and the market is right today.