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Analysis Potatoes

Potato futures market old harvest ends season

June 8, 2024 - By our team of market reporters

The final contract of the 2023 harvest (the June contract) on the potato futures market ends the season at €52.10. The open contracts will be settled at the cash settlement (€52.10) of week 23. This is the highest price since the introduction of the cash settlement methodology on the potato futures market.

The highest contribution for the CS came from the Netherlands, which recorded €54.50, significantly higher than Germany's €50.28. France was slightly above that at €50.60. The CS contribution from Belgium, where Viaverde (formerly PCA) already reached €55 on Tuesday, was €53.10. Last season, the June contracts were settled based on a CS of €50.70.

The June contract could be an interesting contract in principle, as the potato season has been extended in recent years. Most buyers can plan the season well until May. Later in the season, as in some years (like this and the previous year), it can become challenging. However, trading of the June contract on the futures market was extremely limited last season, as was the April 2024 futures contract. After Saxo Bank withdrew as the clearinghouse at the beginning of the growing season, the positions were blocked. The new provider of this service (ADM Investor Service B.V.) was not able to respond quickly to this blockade. The result was a poorly functioning futures market.

Turnover
Now, with the new season of the 2024 harvest year, the potato futures market lags behind in turnover and the volume of open positions. The high contract price seems to be the cause, leading to more contracting and less use of the futures market. With all the excesses in the fields in the EU-4 potato countries, the April 2025 price is already approaching €40, well above the contract price level. However, it remains to be seen whether interest in trading on the futures market will recover. If another season falls short in turnover and position building to sustain the instrument, ending this market may be a logical consequence.

What the years will bring after the possible disappearance of the potato futures market remains to be seen. Indicating a market price around mid-June, for example €40, as is the case today, will no longer be relevant. All (perhaps partly) futures-related contracts will expire, as well as the possibility to hedge as an individual grower or collectively (pools). The question is whether market participants realize the impact if there is no longer a price indicative tool (i.e., the futures market) especially during the growing season! With increasing risks associated with potato cultivation, this blind spot should fade, and the value of the potato futures market - as it exists in almost all other commodity markets (such as wheat, soybeans, oil, energy, metals, etc.) - would regain more perspective.

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