Analysis Onions
The demand is there and it shows in the packed price
The demand for onions for export is not the issue, it remains very good. However, confidence in the market in the slightly longer term is not overwhelming. It seems like after Christmas, no more onions are being sold when looking at the trade. Are sorters running out of their work inventory or have growers missed their chance with onions suitable for Africa? And what does this mean for the DCA Benchmark Price for packed onions?
Growers and processors have found a nice balance. After two years of abundant onion production, both growers and sorters are now back on solid ground. It has happened more than once in the past that after good years, very bad ones followed, but so far, it's not too bad. The price has briefly dropped below €10 ex-farm, but now €16 is not uncommon. If you harvest 50 tons, that's a gross yield of €8,000 per hectare. With increased cultivation costs - partly due to the reduced range of crop protection products - it's certainly not a windfall for the grower, but the directly attributable costs should be more than covered.
Sorters can enjoy these weeks. The demand is good and prices are at a level that doesn't require worrying about how it all needs to be financed. Some may grumble about slim margins, but if you participate a bit in each buying round, it's not too bad on average.
Caution prevails among buyers
There isn't much enthusiasm among both growers and sorters to do business for January or later. Typically, demand from Africa decreases after the turn of the year, and no one wants to end up with onions that turn out to be too expensive by then. The time to do something before Christmas is running out. Many processors have their work inventory for the coming weeks more or less in order. It's worth noting that some may still have quality issues. Buying additional onions in such cases is not the biggest problem. This is an early sign that the buying spree for December could be coming to an end.
Buyers being hesitant to make long-term purchases seems to be a common theme this season. Due to sorters playing close to the chest, they have to hit the road every time there's demand. This keeps some excitement among growers, which in turn supports the price. If foreign demand remains strong, this system could easily be maintained after the turn of the year. If demand collapses, the onion market could just as easily decline. Which way it will go is simply unpredictable.
The DCA Benchmark Price for packed onions continues to trend upwards this week. The bottom of triplets is at €20 and it goes up to €28 at the top for the beautiful white supers suitable for Europe.
