Analysis Onions
Growers take initiative in onion market, will it turn out well?
The demand for Dutch onions is reasonable to good, but certainly not exceptional for this time. However, onion prices took a small step up this week. This price increase is less clearly reflected in the bale price. What packers add on one side, they just as easily give away on the other side.
It is not uncommon for sorting companies to find onions expensive for the grower when compared to what can be made in the bale. Also, it is not new that the grower price rises before anything happens in the bale price. This happened earlier in the season from the end of October as well. Sorters complained then that there was no margin and that aiming for €16 for delivery in December was too much; trade was going for €13 while growers asked for €15.
This situation is somewhat reminiscent of where we are now. Growers with good large onions still want €18, sorters have €15 or €16 in mind, but some buyers are already active with €20 for delivery in a month and a half to two months.
Export
There is, however, a very important difference between the situation in, let's say, week 43 and this week. Towards Christmas, the demand for onions increased and in week 51, as much as 45,000 tons were exported. Predicting is difficult, but we can reasonably say that an export of 45,000 tons in a week or so is not achievable in about eight weeks. Such an export in the second half of the season is not necessary at all. However, it is a risk that the rise in the grower price is not directly driven by increased demand. If you receive a serious offer for the onions, you should not ignore it according to a sorter who also mentioned that everyone naturally reasons from their own interests. They sometimes say about onions, 'Better regret the farewell than regret keeping them.' We will see if this wisdom applies this season.
A little more in the bale should not be a problem as long as the demand remains. That is the crux now. Large and super sizes are in good demand, and if the color is good, a nice premium can be obtained. The challenge is also to find a destination for the mediums and the triplets. In a nice large batch of field crops, there are easily 30% finer sizes. Some sorters look at how much demand they have for the mediums and adjust production accordingly. Others mainly focus on the margin on the large sizes and take it from there. Some smaller companies with few permanent staff take it easy and do not operate or only for a few days.
The differences in demand between large and finer sizes are also reflected in the DCA bale price this week. On average, the price for a reasonably large batch has increased slightly, by about €0.50 to €1. The bottom of the market is relatively stable, while for supers, considerably more is possible than a week ago.
