Farm Frites – Potato Update Crop 2010 & 201

Crop 2010

The April futures finally closed (28th April) at 16,70€ct, still 39% higher than normal. In first week of January the market reached its peak level of 33,80€ct due to the demand from Russia.

There is still a chance for a lot of volatility in the market in the coming weeks; the Russian demand can revive, the low stock of crop of 2010 potatoes, development of the new crop after the very early planting season and the quality of the remaining potatoes of crop 2010 can all still have a certain impact on the price development of the last part of crop 2010 potatoes.

All survey’s in North Western Europe show low stocks of old crop potatoes and a early start with new crop is absolutely necessary to avoid a gap in July.

Crop 2011

Precontracting (January-March)

Next crop contracting was done on a significant higher contract price level then previous seasons. Contract prices rose by roughly 10-15% in North Western Europe. Main drivers are the high wheat prices (as alternative crops), high oil price level (impact on fuel and fertilizer costs) and more confidence in the market by farmers after the 2010 crop. The area planted will probably rise (1%-3%) slightly because of the higher early potato demand. The yearly factory holidays are planned early (late spring time) to lower the demand on old crop and start as early as possible with new crop potatoes.

High yield potential but implicit risks

Planting season was very successful in the North of Europe, by now all farmers have finished planting and huge areas of potatoes are emerging already end of April/beginning May.

But this rosy scenario carries with it implicit risks. The humidity deficit is rising very quickly at this moment and no significant rainfall is expected this coming week. Growth is being stimulated by the warm temperatures and emergence is exceptionally early. With adequate rainfall and continuing warm weather, record yields would be in prospect.
Much of the crop will therefore be emerging in late April, beginning May so the potential damage from a late frost would also be much greater than usual.

The futures market 2011 is reacting on this right now. From beginning March the futures 2011 dropped from 15€ct level back to 13€ct mid of April. Last 2 weeks the market started to move upwards again to the current 16€ct level.

In the graph the spring development of the last 5 seasons is shown in more detail. The effects of global warming/ more climate extremities are shown by this exceptional spring. The drought is in the whole north western Europe affecting cereal crops already and step by step potato crops will need rainfall to continue after the rapid start.