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Analysis Onions

Onion market swings from one extreme to another

May 24, 2024 - Jurphaas Lugtenburg

Whether the trees reach to the sky or dark clouds hang above the onion market, a middle ground seems non-existent. Earlier this month, various traders expected the season to fizzle out. Last week saw a revival and optimism was in the air. However, that euphoria has now subsided.

The onion season 2023/24 cannot be called boring. It is not unfolding as many growers and sorters had expected or hoped. "It keeps things exciting, but it's a shame that it costs so much money if you get it wrong," said an insider. Enthusiasm to continue with Dutch onions until well into June is waning among sorters. The rise in onion prices at the farm gate seemed more driven by speculation than by increasing demand. To be able to handle more expensive onions, the bag price would also need to increase. However, achieving this is proving difficult. "If you raise the price, you quickly lose the customer to a competitor," say several sorters.

You get what you pay for. This certainly applies to onions as well. Some sorters are turning to cheaper onions from growers, investing more time to make something out of them and trying to maintain their margins. However, it is rarely possible to turn them into a top product, and often these onions are also marketed more aggressively. Some buyers are responsive to this strategy and give it a try. If the onions disappoint, they often come back with their tails between their legs. Switching buyers does not bode well for the confidence of sorters. It makes it very difficult to assess what market is left for them this season.

Stock
Another factor putting pressure on prices is the stock of onions still hanging over the market. The good onions will sell, but what lies beneath could become a problem. Some sorters predicted a few months ago that if the price dropped low enough, demand would naturally increase enough to clear everything quickly. In practice, this has not been the case. The demand is certainly not bad, but buyers are not purchasing significantly more onions compared to the multi-year average just because they are cheap. Additionally, it turns out that there are more onions in Germany than previously thought.

The DCA Listing Bag Price Onions remains largely unchanged. Sorters are trying to charge extra for top-quality onions, but buyers are not willing to comply. The lower end of the market shows little change.

Read here the explanation from DCA Market Intelligence on the new Benchmark Prices.

Jurphaas Lugtenburg

Jurphaas Lugtenburg is a market specialist in onions, carrots, and commodities such as wheat, corn, and soybeans at DCA Market Intelligence. He combines his degree in business administration with a passion for farming.
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