Against the background of the very volatile markets, the question arises as to why the April 19 prices on EEX hardly differ from the current spot market prices. An explanation is that the potato processors are currently concentrating on the procurement of contract potatoes. As potato markets were seldom offered free potatoes at the end of the day, that is the logical consequence. In addition, the main crop, which is picking up speed all over Central Europe, has the chance that there will soon be a greater supply of free goods. This hope of buyers is now confirmed for a completely different reason. Ironically, in Belgium, where the harvest is worst, already massive durability problems indicate. These potatoes will enter the market in the coming weeks and prevent further price increases. It is also unlikely that prices will come under pressure as the consumption of "big 5" (B, NL, F, GB, D) potatoes is only 24 million tonnes (-18% yoy) today's estimate of NEPG. Thus, the potato market is massively underserved this season and it can even at the beginning of the main crop Frittenrohstoffpreise hold from 25 to 28 € / dt.A point of contention among the market partners will be the settlement of the sorting. Many potato processors have already voluntarily relaxed their acceptance requirements in order to preserve the goodwill of the farmers and thus fulfill the contracts despite low contract prices. So it is already common to go from the agreed 50 mm + sorting to 35 mm +. Depending on the degree of contract performance, some fry factories even want to pay € 1 to € 4 more than agreed. A starch factory will provide an advance on next year's contract deliveries to help farmers bridge liquidity bottlenecks. The need of commodity buyers is so huge. In some cases, however, this will lead to disputes and even legal disputes. In Belgium, France and partly also in Holland, the delivery obligation with fixed quantities and prices is very high. This is partly up to 90% of the expected average yields. Anyone who has such a delivery obligation this year but can reap only 50% of the usual income is obliged to obtain the quantity on the free market.With contract prices of 15 and daily prices of just under 30 € / dt you can calculate how high a claim for damages can be. The appeal to force majeure because of an extraordinary natural event of national proportions (quote Klöckner), is not accepted by the raw material buyers. They want and need to see goods and will force defaulting providers to deliver. The dishes are certainly getting busy. Now, of course, one wonders what impact that has on future contracts. No longer making volume commitments is, in my opinion, no solution. However, it is also unfair to demand from the farmer a volume promise, if the potatoes are not even planted. This form of contract was always endorsed by consultants, banks and associations and farmers became speculators. Contracts should be designed in such a way that farmers only agree on quantities when the goods have really grown. Irrespective of this, the parties can secure a fair price early on the derivatives exchange. These contracts may be exchanged for physical delivery or acceptance later. This is called "exchange of futures for physicals" or in short the "efp contract".Thus buyers and sellers secure their margins and exchange the speculation with goods and price against a high planning security. The grain market, which is also volatile, only works the world over.
ZMP Live Expert Opinion
Where the potatoes are still growing in Belgium, quality problems are becoming more common. Especially in Flanders, where rain fell in August, the potatoes are still growing. The maturity of the variety Bintje is given as 70%, that of the Fontane is 60%. Fontane has put away the heat and dryness of the summer best and can currently also gain in revenue. In Wallonia, however, the fry varieties have already stopped growing. From Flanders one hears more and more of growth, pupil and tubers with low sub-water weight. These batches are unlikely to be suitable for long-term storage and therefore supply is currently outstripping demand.
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