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Analysis Potatoes

European potato sector further in crisis

June 15, 2024 - By our team of market reporters

In the potato sector, there are probably not many growers or other participants in the potato chain who can remember a more extreme start to the season. Even last week was far from sunny and there has been more than enough rain locally again. According to the weather forecasts, there will be no change in the coming week. There can be a lot of rain locally again, causing further damage in all crops.

In particular, in the south of the Netherlands and further in Belgium, potatoes were planted again last week. However, with the month of July already on the horizon, there are still parcels untouched. This means that in some cases, the growing season has already partially or sometimes largely failed, and a normal yield is no longer in sight. It seems that the potato market in the EU-4 countries has landed in a sort of perfect storm: everything that can go wrong seems to be going wrong.

The precipitation started as early as October last year, at a time when Belgapom was quoting €10 per 100 kilos (hard to imagine now). From that moment on, it has been almost constantly too wet without it being a real winter period. The heavy rain caused major problems during the last growing season at harvest. The harvesting was extremely difficult and many potatoes were lost. This is now reflected in the development of the 'old' harvest market. For processing potatoes like Fontane, more than €60 is being paid, a record that is being achieved for the second year in a row. And the season is not over yet. Higher prices are already being made for a popular variety like Agria.

From shortage to shortage
Coming from a shortage situation, we are heading towards a new shortage situation for the 2024 harvest. The challenge is particularly great for all stakeholders, as no one knows how to approach this exceptional market situation that has arisen. An inventory 'in the fields' indicates that the sector must now anticipate at least 15% less being harvested than would have been possible in a normal situation. The total EU-4 harvest is expected to be less than 20 million tons, which logically leads to a persistently tight market. It will mainly be the free part of potatoes that will be in short supply, making it even more explosive. After all, the largest volume has already been contracted.

Just to summarize the points:

  1. Poor structure due to extremely wet autumn in 2023
  2. Shortage of seed potatoes for the planned acreage.
  3. (Too?) late planting of potatoes, especially in Southern Netherlands and Belgium
  4. On some already planted fields, there is a lot of precipitation leading to damage and yield reduction
  5. The enormous phytophthora pressure that is difficult to control due to wet weather
  6. Increase in processing capacity and demand for freshly baked products

All these problems/challenges are causing the futures market for the April 2025 contract to now quote €40, a record for this time of year. Regarding the futures market, supply is limited despite the high price level. Growers are hesitant to sell or click, as they do not know what will emerge above ground and to what extent has already been sold on paper. A second season with unpredictable extremes will pose even more challenges for the coming years. Seed potatoes will be an issue, but also keeping the consumption grower motivated to fill significantly expanded fry processing lines.

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