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Analysis Potatoes

Major concerns about course of the potato season

May 31, 2024 - By our team of market reporters

The concerns about the further course of the growing season are and remain particularly great. After the largely flooded harvest period in 2023 and the wet winter, several fields on which potatoes are supposed to grow this year have not emerged unscathed. Now, on top of that, there is a spring where it just won't dry up.

Until now, not all potatoes have been planted, with Belgian growers having the most backlog. Reportedly, at least 50% still needs to be planted there. This is important for the Belgian processors, who have quite a say in the matter! Growers spread across the EU-4 countries who have already planted are experiencing a lot of inconvenience and damage to their crops. In that sense, the discouragement among growers is significant, and the joy of being an arable farmer is currently not very high for many.

The question that arises, but which many stakeholders do not seem to be really concerned about yet (first, let's try to get the potatoes somewhat on track if that's still possible), is what all the malaise in almost all EU-4 countries will do to the price development. The sentiment regarding the contract prices for the 2024 harvest year was not bad, however, now that perhaps a part of the harvest per hectare will not come to fruition to a greater or lesser extent, despair sets in.

False sense of security?
The average prices of old harvest potatoes are already well above the €50 level, and the new harvest fry potato price is already looking towards a price of €40 (closing price Friday, May 31, futures market April 2025 €38.60). The POC questions the certainty of the potato contracts in a tweet from Wednesday, May 30.

The 2024 harvest year would turn the commercial thinking of the potato grower 180 degrees (has there been research into this?). The tweet advocates for a more free potato market since there is no risk margin included in the contracts. The tweet does not explain how to reverse the trend of the recent years, where more and more potatoes are being contracted. Growers are certainly well served this season with the significantly higher contract price, which the signatories of the contract apparently agree with, otherwise there wouldn't be so much being committed. The fact remains that due to the seed potato supply, the dependence of the potato grower on their customer has certainly increased for the 2024/25 season, and this will not decrease in the coming years.

Straightjacket
It is understandable that the processors almost have to contract most of the potatoes. The point is that the part of freely tradable potatoes has become so limited over the years that the market feels more and more like a straightjacket each season. If the crops in the EU-4 countries grow well, there is quickly a surplus, and you are happy as a grower with what has been contracted (those years will come again). If there are problems, as was the case last season during the harvest period and currently in the pre-season, the potato contract can be felt as constricting. The market price can end up significantly higher than the contract price, while there is nothing left to sell.

However you look at it, the yield of an arable crop, including that of potatoes, cannot be predicted; the weather is the merchant. Therefore, committing too much, often far in advance, is a point of discussion. The fact that the futures market - traditionally a fixed value - can solve some of those problems is underestimated by the sector. There are various pools, but also growers or growers with a click contract can make a significant premium for the second year in a row compared to the contract.

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