GLOBAL MARKET OVERVIEW ONIONSOctober 28, 2022
Volumes of onion are down this winter in many countries, with a decrease of up to 40% in Spain, and less significant but still notable losses in Germany, France and the United States, among others. Large sizes are particularly hard to find, and this lack of supply has driven up the prices across much of the global market. This could be good news for the growers, who are also facing higher production costs, but it remains to be seen whether consumers will be willing to pay these prices, although demand appears to be holding up for now.
Netherlands: All eyes on second half of season
“It is a controversial year,” a Dutch exporter says of the onion market. “Demand is still lagging behind this period compared to previous years. This is especially evident in the Asian market. Whereas in previous years we were able to sell large volumes to the Philippines, among others, we are now too firm on the price to compete with Chinese onions. Everything this year also shows the role of the Dutch onion on the global market; namely the gap filler. As long as local harvests are sufficient, Dutch exports will remain too expensive to fill the gaps. All eyes are therefore on the second half of the season. Whereas in previous years the transition of the busy period occurred only after the turn of the year, the trader expects the busy period to increase earlier due to higher demand mainly from southern and eastern Europe. “You notice that most of the yield problems have taken place in these regions,” he said.
Germany: Drought affects volumes and quality
Due to a lack of rainfall and persistent drought, the German onion harvest is quite disappointing this year, a large cooperation says. “We have already received good enquiries for large sizes from Eastern Europe, but unfortunately we have not been able to satisfy them. Accordingly, we are now focusing on supplying the domestic market.
The weather conditions this year have also led to a decline in the quality of the yellow onions. “After weeks of drought, it started raining at harvest time, which is why we had to postpone harvesting. Due to small sizing and quality problems, there will be considerably less storable produce this year. Until February-March we will probably be able to fulfil the retail programs in the 40-60/35-55 grading, but from April on goods will be scarce.”
Austria: Good export situation
The Austrian onion market is in stable condition. A sufficient supply meets a satisfactory sales situation. Exports in particular are doing very well. Domestic sales are quiet but steady, as usual for the season. The price level of the previous week was overall continued. At the beginning of the week, prices for onions, cleaned and sorted in boxes, were still mostly 30 to 35 euros per 100 kg, depending on size and quality.
France: Sales delayed by summer weather
A marked deficit for the harvest on all French territory can be observed at the moment. Particularly affected are large and very large sizes, with a deficit of 15 to 20%. As far as sales are concerned, sales are following the weather. Today’s summer weather, while it is autumn, is delaying onion sales without blocking consumption, for both yellow and red onions. A consumption which would be more dynamic with a cooler weather. Prices remain high compared to previous campaigns due to various factors such as energy costs, packaging and transport.
Italy: Lack of product pushes prices up
A major onion trader in northern Italy says sales are normal in terms of quantity, but prices are quite high. In recent days, the Borsa Merci Bologna has established a range of 0.55 to 0.73 €/kg for packaged in 5 or 10 kg bags, depending on the type of onion. Prices would be very high in the case of a normal year, but because of production costs they are fair to repay the producer and packer. The trader says that retailers have not yet realized enough that, starting in March, the availability of Italian onions will be very scarce. Already offers of onions are arriving from Germany at prices around 0.42-0.45 €/kg.
This year’s niche onion season in the inland areas of Sicily ended the first week of September, and it was a very unusual year because of the drought, which was far from satisfactory. “We were without rainfall from December until May,” complained one producer. “The transplants, which took place in January, forced us to irrigate as early as a few days after planting, with great effort on the economic level due to the cost of energy for pumping irrigation water. The growth of our “Cipolla Paglina di Castrofilippo” was penalized in terms of sizes, despite the relief irrigation interventions. Sizes in a normal season, in fact, range from 1 to 2 kg per individual onion. This year only 20 percent achieved a size close to 1 kg; 40 percent achieved a size between 300 and 400 grams; and the remaining 40 percent had a size of 50 grams. This is a huge loss that has caused the producer price to skyrocket to 1 €/kg on average, while it normally sells between 0.40 and 0.50 €/kg.”
More than 19 million households in Italy buy onions at least once a year. Yellow onions have the highest share reaching almost 36 percent; red ones rank second exceeding 26 percent; white ones exceed 21 percent. They are then followed in order by: leeks, Borretana onions and shallots. Onions are sold either by variable weight (loose) or by imposed weight (in nets). The preferred channels of purchase are supermarkets. As for organic, variable-weight onions are purchased to date by about 2.2 million Italian households, a decrease of more than 13 percent compared to the previous 12 months
Spain: Good prices, but up to 40% less onions
Spanish onions have been selling at a good pace and with good prices since the start of the season.
The 2022/2023 onion campaign has so far been very different compared to the previous one, which was really ruinous. The demand is stable and the drop of around 40% in the onion production in Spain, as well as in the rest of Europe, led to an increase in prices. Unlike last season, when average prices ranged between 8 and 10 eurocents per kilo, this year large-caliber onions cost between 35 and 37 eurocents per kilo, while medium calibers cost between 25 and 30 eurocents per kilo.
Last year, prices did not allow growers to cover the production costs, but this year it has so far been possible. In just one year, the cost of producing a kilo of onions has shot up to 25 cents. The large sizes are the most demanded, as they are the most scarce throughout Europe. In fact, it is going to be very difficult to find sizes between 60 and 80.
The harvest of the Grano de Oro onion, the one with the longest shelf life, has just finished. Although the rains in March and April prevented the onion from being sown at the usual time in Castile-La Mancha (the main producing region in Spain), the dry weather and abundant hours of sunshine that followed has not only brought forward the end of the harvest, but has also had a very positive influence on the storage quality of the onions, and it has also had an impact on the sizes and yields.
The acreage, yields and calibers have been reduced in all producing areas of Europe. The exit of Ukraine from the market due to the war has also had a noticeable impact and resulted in a below normal onion supply. In recent years, the onion acreage had recorded a significant expansion in Ukraine, surpassing even that of Spain, so its absence in the market is being felt strongly. Its onions used to supply the Eastern European and Asian markets and had a good skin quality and flavor. Meanwhile, Romania’s production continues to increase.
35-40% of the sales of fresh Spanish onions go to the domestic market and around 30% is exported, mainly to the United Kingdom, Germany, France, Portugal, Italy and Morocco, among other destinations. The rest goes to the processing industry.
South Africa: Prices at record high
It’s an interesting onion season for South Africa: prices are at record highs, as much as triple last year: around R10 per kilogram, because much fewer onions were planted.
It was a difficult onion season last year, with weak prices, plus all manner of input costs – fertilizer, fuel, labour, transport and packaging – have sharply increased, coupled with water constraints & disease pressure in certain areas, and altogether in some areas 20% to 30% fewer onions were planted, and now the market has half the usual volumes.
The market is transitioning at the moment from onions grown in Limpopo Province to the Northern Cape and western Free State.
It’s expected that onion prices will remain strong up to Christmas, which is usually one of the strongest onion sales periods in the year.
India: Prices and sales down for Indian onions
Currently the benchmark onion price at Lasalgaon, Maharashtra is Rs 1,220 / 100 kgs, down 20% from a year ago, and way lower than the last three years’ seasonal average of Rs 2,354 / 100 kgs. Rabi onion harvested during April – June accounts for around 65% of the country’s onion production and meets the consumer’s demand till the kharif crop is harvested in October-November. Kharif harvested onions are not stored because of higher moisture content thus entering the market directly. Onion prices do not witness a sharp spike in October or November as they used to a couple of years back, as production has increased along with storage infrastructure
North America: Lower supply and higher demand expected to continue
Onion supplies for 2022-2023 look to be more limited than this time last year. “We have operations in Washington and our crop is lighter this year. There were weather issues in the Washington growing and harvesting period and that’s affected yields,” says one shipper. “We expect to wrap up our Washington season by the end of January which is about a month or so earlier than normal.”
Along with Washington, the other major growing region is Idaho-Oregon and other regions are also shipping including Michigan, New York and Canada.
At the same time, the shipper notes that sweet onion supplies are also coming from Peru. “We expect to have steady supplies through the holidays and into the spring Mexican onion season,” he says. “The quality is very nice and the logistics component, which was a big challenge last year, has improved this year. From an onion supply standpoint, we’re optimistic for a good selling period.” The Peruvian sweet onion season starts in July and goes through to February.
As for demand, the shipper says it’s been a year where demand has exceeded supply. “Demand for staple items like potatoes and onions has been strong,” he says. “The markets have reflected that. They are higher than average all year and with the issues in the Northwest, I would expect the same lower than average supply and higher than average demand for the rest of the year.”
The earlier end to the Washington season though won’t necessarily mean a gap in supplies. “Now that the supply report is out and there are less supplies, most grower-shippers will start allocating product and have less supply for the spot or open market. It won’t create a gap but it will just keep prices strong and potentially increase prices again in the spring onion season,” he says.
He notes that pricing onions in the late summer rose to approximately $20/bag, a number that’s considered record-level. “That has settled down to $14/$15/bag right now and I expect that to remain steady to spring,” he says.
Peru: Colombia becomes the second main destination for Peruvian onions, displacing Spain
In the last National Survey of Planting Intentions (ENIS), it was already predicted that for the 2022-2023 agricultural campaign, the areas planted with onions would be reduced by 5.8% in Peru. According to the ENIS, this crop, along with potato, rice and carrot crops, which have a lower sowing intention, is where the distribution of urea would be prioritized, which is expected to contribute to balancing the sown area and thus reduce the impact. In this regard, the Ministry of Agricultural Development and Irrigation (Midagri), through the Rural Agricultural Productive Development Program (Agro Rural), finally announced the award of the international purchase of nitrogenous urea, which will arrive in the country in December; “too late”, as different voices in the industry have pointed out.
And the export figures for this commodity, whose low unit price makes it even more difficult to deal with the increase in logistics costs, already reflect the complexity of this new scenario in which, as one exporter had come to say, “the freight of the onions would cost more than the produce itself.” Peruvian onion exports have experienced a setback in their shipments, which between January and August have totalled 41.9 million dollars FOB, showing a 4.4% drop in value compared to the same period last year, according to figures shared by Sunat, breaking in 2022 the continuous growth trend that shipments have been following since 2017.
In addition, the high logistics costs have led to the prioritization of the closest destinations for the Peruvian product; something that reflects the export statistics available to that date and shared by an important Peruvian consulting firm.
The United States remains the main destination for Peru’s onion exports with a 65% share of the FOB price, but in the first months of the year, Colombia – which shares a border with the country – has increased its purchases of Peruvian onions until occupying the second position with a participation of 19% displacing Spain, which goes back one position in the ranking of main destinations for the Peruvian vegetable with a participation of 11%; At the end of last year, let’s remember, exports to Spain represented 21% of the FOB value, while Colombian exports only represented 10%.
Oceania: Normal season for Australian onions, New Zealand still feeling effects of pandemic
Australian onions are expected to be back to full production levels this season. An industry body representative noted that onion acreage in Australia is fairly steady and the number of hectares planted this season was similar to last year. She said: “Queensland was hit with wet weather just after planting, which caused some issues. However, the rest of the country is on track for a normal season. Queensland is about to come online in approx. 4-6 weeks with fresh product, the markets are looking quite good at this stage.” The peak industry body is not expecting any issues regarding storage quality at this stage.
In New Zealand for the year ending June 30 2021, according to the most recent figures, the export value for onions was $145million, with 56 per cent sent to two markets; Continental Europe $49m and Indonesia $33m. That was a slight decline of $148million, with the impacts of COVID-19 affecting all of the horticulture sector through labour supply, disrupted supply chains, and disrupted food services. However, volume was slightly higher from 2020, from 190,169 tonnes to 208,133 tonnes. The three most predominant council areas in NZ growing onions were Auckland, Waikato and Canterbury.
From Fresh Plaza