In the first half of this season, the French fries industry focused on fulfilling contract obligations and balancing production and sales. The market is now developing differently than expected.
It was long thought that this season would be characterized by oversupply and extremely low prices. However, many parties now seem to have disappeared silently from the market. The mood on the market has become firmer and this appears to be continuing in the coming weeks.
Not only has the industry expected an oversupply, but some growers have also said goodbye to their stock of potatoes early in the season. The loss of chlorpropham in storage has made long-term storage riskier and more expensive. Consignments where there were doubts about the quality were sold at an early stage, for example as feed. The motto seemed to be: don't incur too many costs, don't take risks and when in doubt, sell. In addition, due to the low price level, there was a lot of interest in potatoes from, among others, the animal feed industry.
Large volume has been given a different destination
It is difficult to determine the volume of potatoes that have been given an alternative destination. Several insiders talk about approximately 800.000 to 1 million tons in Northwestern Europe. With the start of the French fries industry after the holidays, interest in buying potatoes has increased. Various tenders have shaken up the market. The demand seems to be mainly prompted by Belgian processors who contract less in advance. Dutch processors cannot escape the recent price improvement either. In the current market, processors must do their best to actually get their hands on the co-delivery tons.
Prices for direct delivery have now risen to €6 to €7 per hundred kilos in the quotations, but several insiders report that in practice this is sometimes (significantly) higher. The futures contracts for April delivery are now trading at more than €10 per hundred kilos. Growers who currently have free or co-delivery potatoes in storage have invested in a good storage cell, with or without mechanical cooling and relatively expensive sprout inhibitors.
Partly because of this, they are not yet inclined to sell at the current, still relatively low, price level. Given the large share of potatoes that have been given a different destination, several parties expect that the recent price increase has not yet come to an end. At this stage of the season, most growers are not yet prepared to sell (far) below cost price.