Potato market forms Arable Farm Index

The switch to the potato forward contract for April 2019 has put the Countus Arable Farm Index in a different light. The sharply higher price level on the futures market causes the index to rise by 28 points. The other crops, however, provide little support to the sector barometer.

The Countus arable index reached the level of 20 points in week 95,10, the highest level since week 7 (end of February) of 2017. Because the potato futures market traded at a lower level, the price fell slightly in the last 2 weeks of May. Nevertheless, the Index continued to move at a high level relative to the year. The difference with the end of April (week 18) is large, when the index was still 66.

Potato Futures Market
The April contract for 2018 closed on Friday 27 April at a level of €5,80 per 100 kilos. On the first trading day (April 30), the April 2019 contract closed at €15,50. It then went up further, to a maximum of €16,90 per 100 kilos. The price has since fallen slightly again. The month of May closed at €16,30. This ensures that the chart of the Arable Farming Index shows a completely different picture compared to the previous months.

Solid foundation
Feed wheat prices also give the Index some support. During the month of May, the EU feed wheat price fluctuated around €18 per 100 kilos, before rising to €19,10 per 100 kilos at the end of May. Given wheat's 'pivotal function' in the building plan, this rise provides a solid foundation for the Index which is likely to continue into June.

The Index can expect little from the other components of the Index: yellow seed onions and Bintje seed potatoes. The stock price for yellow onions fell in May. The month started at $6 per 100 kilos and saw $4,50 as a low, before closing the month at $5.

The stock exchange listing in Middenmeer for Bintje 35/45 seed potatoes only plays a very minor role in the Index. The NAK declaration figures show that the acreage of Bintje seed potatoes in the Netherlands has decreased by 134 hectares this year (to 682 hectares). The last stock exchange listing took place on April 18, so the contribution has no influence on the month of May.

Area figures
The Arable Farming Index is calculated weekly, in order to provide insight into the financial situation in the arable sector. The pricing of 4 crops is used as a basis. The area determines how heavily each crop is included in the Index.

The current figures have been calculated on the basis of the acreage figures for 2017. They thus provide an accurate picture of the income from the 2017 harvest. At the end of June, Statistics Netherlands will publish a first yield forecast for 2018. This could change the Arable Farming Index with retroactive effect.

Niels van der Boom

Niels van der Boom is a senior market specialist for arable crops at DCA Market Intelligence. He mainly makes analyses and market updates about the potato market. In columns he shares his sharp view on the arable sector and technology.

n.vanderboom@boerenbusiness. Nl

© DCA Market Intelligence. This market information is subject to copyright. It is not permitted to reproduce, distribute, disseminate or make the content available to third parties for compensation, in any form, without the express written permission of DCA Market Intelligence.