Where the yellow onion market is currently declining further, the red onion market once again leads its own life. With a start of €18 to €23 per 100 kilos for red onions off the field, the market in Emmeloord (The Netherlands) surprised many growers and even the trade. It is only the question whether this sets the tone for the ex-farm and the storage season, or whether it is just a good start due to limited supply and/or strong demand for red onions.
A week and a half ago, the first listing for red seed onions off the field for the 2024 harvest appeared on the board at the market in Emmeloord. With a start of €18 to €23 per 100 kilos for the size grading 60% large and a stable sentiment, that does cause some surprise and cheerful faces in the onion market. Especially when you compare it to the yellow onion market, which is increasingly struggling price-wise and where there is not much enthusiasm for seed onions yet. This while the seed onion harvest is about to start. Also, the market price in Goes noted for the first time this week and came out at €20 to €23 for red onions, while Emmeloord kept prices stable this week. However, the sentiment did change: from stable to calm.
Supply and demand ratio completely different
The explanation for the big difference with the yellow onion market currently lies mainly in the difference in supply. Various packers and sorters indicate that supply and demand are much better balanced at the moment and that currently demand is in control. The volume of red planting onions, which is experienced as a difficult crop, is limited. The same applies to the early red seed onions and, for example, the part that goes into the ground as pot onions. On the other hand, there is also a pretty good demand, several sorters note from their orders. Europe remains a market for red onions and there is not much new harvest available. The Netherlands can deliver new harvest as one of the few at the moment, a sorter explains. Germany is one of the major buyers at the moment and Great Britain is also active in the market for red onions, an exporter says. But volumes are also being prepared for other destinations and there is interest overseas.
Another reason is that the red onion market (unlike yellow) started with an empty or rather 'clean' market from the past season. Imported onions from outside Europe and from the Mediterranean region filled the demand on the European market. It also ensures that the bag prices for red onions have remained relatively stable and the market is now benefiting from that.
Waiting market
The start of the red onion market this season is good, but a large part of the sector initially thought differently. As mentioned, the height of the price came as a bit of a surprise. Until recently, the red onion market was very hesitant. Limited trade was done and what was agreed upon in advance dates back a long time and was not fixed at prices higher than €17 to €18 per 100 kilos, with exceptions. Both growers and trade and sorters found and still find it difficult to estimate where the kilos per hectare will end up this season. The late spring and a special growing season with various extremes are the reasons for that. In addition, the last kilos still need to grow. And it doesn't make it easier that the red onion is more vulnerable and sensitive to environmental factors and structure in cultivation, for example.
Acreage growth
The red onion cultivation has also significantly increased in size this season, after the prices of the 2023 harvest rose during the ex-farm period and then remained at a high price level. Therefore, it is not surprising that due to the special growing season and expansion in cultivation, the market has been hesitant so far. Looking at the figures from the Central Bureau of Statistics (CBS), the red onion acreage grows from 3,680 to 4,652 hectares, an increase of 26%. Onion seed supplier De Groot and Slot, which has a large market share in the red onion segment, indicates that the sales of red onion seeds have indeed increased significantly this season. Compared to the 2022 harvest year, the red acreage is still 258 hectares or 5% smaller. However, this is based on the CBS figures and what has been filled in by growers themselves. Acreage figures from before 2022 are not available for red onions. In the years before, the red and yellow onion acreage was not split. However, the red onion acreage has increased on average over the years.
Opportunities for 2024
Sorters and exporters see the demand for red onions increasing in Europe and worldwide. With this demand and production, there is no longer really talk of a niche market, as was previously mentioned. However, it remains a completely different market than yellow and the two types are hardly comparable. African countries, for example, demand yellow onions, while many countries in Asia import pink and red onions. This was evident in 2022, when the yellow onion market surged and red was a cheaper alternative. Some red onions did go to African destinations, but in many cases, that was it.
There are opportunities for overseas exports this season, as revealed in a survey of sorters and exporters. There are still export restrictions for red onion exports in India, although there is currently no ban as there was from 2023 until May this year. With the expected Kharif harvest (summer harvest), which according to rumors is disappointing due to excessive rainfall, those export restrictions may persist. Not that India comes to the market for Dutch onions, but surrounding countries that normally import onions from India can. This has happened in other years as well.
On the other hand, the price level in Europe is also important. Last season, the red onion price was already very high from the start, and with the transport costs on top of that, it was difficult to compete in Asia. Especially with a country like China, which has quickly become a major onion exporter and can deliver cheaper. Quality is also highly valued by some countries, although there are of course limits. The amount exported overseas is by no means the volumes that a country like Ivory Coast or Senegal imports, but taken together and considering the smaller red onion acreage, that is also not necessary.
Europe
Furthermore, the red segment is also growing on the European market, as noted by sorters. The demand in Europe for red onions increases every year and is expected to continue in the coming years. There are no hard figures available on this, but it is clearly reflected in the sales at sorters and packers.
Not only the demand for red onions is growing, but production is also increasing on European fields due to a larger acreage. After several years of good prices and a nice balance, growers outside the Netherlands have also opted for more red onions in the crop rotation. Especially with onions, this is something we see every season in the Netherlands, but also elsewhere. The growth in the red acreage is significant compared to other years, with, for example, insiders indicating that there has been a lot of expansion in Germany and a part is grown in the border region. It is known that some of this ends up on the Dutch market. These figures are not included in the CBS count. In addition, the European expansion of cultivation means that there may be fewer export opportunities, although this cannot be estimated at the moment. Red onions are not grown everywhere in Europe.
Not below €11.50 in five years
With the grower prices of the past five years, a positive balance has been achieved with an average yield in red onion cultivation. In the last five years, the grower price has never been below €11.50 per 100 kilos for the large size grading (60mm upwards). The last time was at the end of the off-season in 2020 for just a single week. In addition, the storage season started at €13.00 in 2019. Furthermore, the prices, even later in storage, have always been higher. The storage season has also been rewarding at many times. However, the differences between the fine and large size grading sometimes increase significantly. Something that is often mentioned by sorters is that the size 40-60 is sometimes difficult to sell at certain times of the season.
A repeat of 2022
In terms of acreage, the 2022 harvest year is not far off from this season. The yield that year was estimated at exactly 40 tons per hectare according to the CBS; 5.5 tons lower than for yellow seed onions. In that year, drought and heat took their toll on the seed onions. The yield for this season remains to be seen, but according to various insiders from the sector, the yield seems to be slightly higher than 40 tons per hectare. It is clear that it is disappointing in the field. The acreage in 2022 was 258 hectares (5%) larger than now, which somewhat compensates for the better yield. Apart from the export, with the strong growth of this acreage, it is not the case that there are already too many red onions. In 2022, the off-season price started higher than now, but the grower prices rose to over €35 per 100 kilos after the turn of the year. This often happens after the turn of the year, as can also be seen in the previous graph. This is because sales in the months of September, October, November are the smallest for red onions.
In short, there are opportunities but it can go in any direction. After all, they are onions.
