News Potatoes
One record is not enough for DCA Frozen Fries Index
The continuing price reduction for free-buy potatoes is having irrevocable effect on the frozen fries cost prices. This also means that new records have been settled for the DCA Frozen Fries Index. The price has not been this low for processors, since October 2023.
Last week, week number 19, the Open Market Index came in at €309.10 per tonne, which is a reduction of €17 in a week’s time, which means a 5,3% decrease. The 70-30 Index dropped €5 (1%) during the same period.
Sunflower oil prices also saw a price reduction last week, albeit a small one. Dutch TTF natural gas prices, despite a gulf of warm weather entering Europe, showed a minor increase in week 19.
Situation unheard of
Meanwhile, the European potato prices continue to slide further away. The DCA EU-4 Potato Index reached a level of €10.99 per 100 kg in week 19, with the Netherlands and Germany leading the way in the most recent price reductions. Especially for Fontane, the €10 bottom in the market couldn’t be held and prices have gone as low as €7.50, which is unheard of in this time and day.
Whether further price reductions are in the pipeline remains to be seen. So far this season has defied all market laws that were previously known. From a processors’ perspective there is the opportunity to produce frozen fries at a competitive level, but this is no good if there are no buyers for the products. That is what is currently the situation in much of the world. Especially oversees exports are being hit hard, so exporters say.
Sentiment
Between 70% and 80% of all potatoes that a factory uses is contracted on a fixed-price bases. The remaining quarter to fifth are generally free-buy lots that can now be scooped up for extremely low prices, much to the annoyance of growers, which are battling against ever increasing cost prices. Not that processors are happy with the current situation, where any form of positive sentiment is hard to find these days.
The next big question is: what does the current situation hold for the future? Up until the start of 2025 potato processors were making big plans for further capacity increases. Some are even doing so to this day, namely Aviko and Farm Frites in Belgium.
Tariffs
Is a lacklustre demand for frozen potato products on the world market a one-off, or a sign of things to come? President Trump might have a wildcard in his hands with proposed tariffs on most goods, including potato products. These can make or break the market and the current ‘what if’ situation is wreaking havoc on customer demand around the globe.
Niels van der Boom
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