News Potatoes
Access to the futures market as usual
The potato futures market has gone through a turbulent period, to say the least. After Saxo Bank unexpectedly withdrew, brokers had to quickly find another clearinghouse (for settlement on the stock exchange). DCA Finance has joined ADMISI, the London subsidiary of commodity trading company ADM. ADM's strict requirement was that customers must always have a basic amount of €100.000 in the account. That turned out to be a bridge too far for a number of customers. After extensive consultation, it was decided to drop the €100.000 requirement. “The conditions at ADM are now even slightly more flexible than they were at Saxo Bank,” explains Pieter Post of DCA Finance.
"For trading houses, processors and large independent growers, the €100.000 requirement was not really a problem," says Post. "But speculators and growers who signed a limited number of contracts dropped out. After consultation with ADM about the nature and functioning of the potato futures market, we jointly came to the conclusion that such a capital requirement defeats the purpose and deters many customers."
The conditions are now largely comparable to how they were. "The deposit (amount that must be deposited in order to trade) is €1.300 lower than it was with Saxo, placing an order costs €28,30 and that is comparable. The balance in the account must be paid at the end of the day are positive, and that is also the way it was. The difference is that ADM pays a small interest on the outstanding balance of 0,35%. Saxo only did that from €100.000," says Post. "Opening an account with ADM takes a little longer than we were used to, namely approximately six weeks. This is due to ADM's extensive checks. Customers can choose from a private or business account. For the speed of opening an account it makes no difference. We advise our customers to consult with their accountant which variant is the most favorable from a tax perspective."
New round
With the more favorable conditions, Post expects that the potato futures market can become a trusted value again. "Because Saxo withdrew at the start of the season and we did not immediately have a replacement, we were able to build up far fewer positions. We were unable to catch up on the deficit that then arose and we will remain there for the rest of this season We will not have that problem in the coming season. Growers are now busy with the harvest, but when things calm down in November and December, there will be plenty of time to open an account so that trading can resume from February/March. in harvest 2024. And it is not just our trusted DCA Finance customers who are inquiring about an account."
Interest in the futures market is further fueled by the bizarre developments in the potato market in a broader sense. "Last winter, more potatoes were contracted at prices that we considered historic at the time," says Post. "We started this season on the futures market with prices of approximately €30 to €35, but the physical quotation started at €50. In recent weeks we have seen the physical market decline rapidly and we now see €10 on the board in Belgium. In such a market, the futures market offers guidance and opportunities for the grower to protect themselves to a certain extent against the extreme volatility in the market. For the speculator, this volatile market offers opportunities. Something is happening again on the potato market."
Jurphaas Lugtenburg
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