The cash settlement (CS) reached a dramatic low on Thursday (April 9). Never before in the history of the potato futures market - in the era of settlement on the basis of a CS - has it been quoted so low.
The CS ultimately came to €1,70. Less than a month ago, the CS was still trading at €12,80, last week it was already €3,10. The expectation for this week was an even lower CS, but below the level of €2,00 was not taken into account. Also considering the fact that trading was still at €3,00 that day.
All the misery caused by the coronavirus has hit the chip potato sector hard in recent weeks. A huge problem looms, especially at this stage of the season when many storage potatoes are delivered and paid for. While the sales of processors who supply the food service (restaurants, events such as Formula 1 and European Championship football, company canteens, etc.) have virtually come to a standstill. A number of chip processors' lines are still running, but the end product goes into cold stores or is sold to retail. However, this volume is too limited to use all the potatoes in the short term.
Bottom in the market
Over the past 2 weeks, many potatoes with their original final destination for French fry processing have been purchased by parties that trade in, among other things, animal feed. This created a bottom in the market (if you can call it that) of €1,00 to €1,50 per 100 kilos.
This absolute bottom price is reflected in the CS, which is less than €1,50 for the contribution in France, Belgium and Germany. For the Netherlands this was just above the €3,00 level. With this score, the CS indicates the harsh reality of the moment, from which you have to wonder whether any recovery is possible before the end of the season.