2021 has been a year of extremes so far, particularly for the onion market. In the UK in particular, large swings in weather conditions have created a complicated growing season, whilst in the Netherlands, production is up 11% but sales are still slow, as the previous season’s onions hamper export sales. In China, logistics continue to adversely affect sales as exporters struggle to move volumes out of the country, with increased domestic demand proving not quite enough to keep prices up. In South Africa, the picture is completely the opposite, as lower production pushes prices up.
The Netherlands: Still little demand for new onion sets in a slumping market
The new onion set harvest has begun, but sales are still somewhat sluggish at the moment. "This is the case every year around this time. July is never really a busy month. The market is still depressed. Customers are not yet desperate for onions and therefore only order what they really need. That takes time. When the downturn is over - which in my view can happen at any time - I expect the demand to pick up quickly," says a Dutch exporter.
"At the moment, there is already some demand from the United Kingdom and Africa, but precisely at those destinations there are still old onions in the way. There were still more of them than everyone thought and there are customers who, as long as the quality is still good, opted for a cheaper alternative. It is to be hoped that when the market stabilises and demand picks up again, we will also have the logistical possibilities to get our product to the customer. The problem of the container shortage is stubborn and hangs over the market like a sword of Damocles."
There seem to be plenty of onions this year, as evidenced by the 11.3% increase in seed onion acreage according to CBS. "There will be some product lost here and there due to some water damage, but 11% more is still a lot. So there will be a lot of work to do,” the exporter observes. "Hopefully we will end up with a decent price, so that both the grower and the trade will have a good season. At the moment the price in the bale is between 21 and 22 cents, but as said, everyone is very cautious."
"Qualitatively, the first planting onions are looking good. The weather conditions have been good and there is a beautiful product coming in. It is still difficult to predict what the main harvest of the seed onions will do. Here and there some water spots from the wet early summer are already visible. But the weather in August will be the determining factor. If we get a nice dry month, we expect to have a beautiful quality at our disposal. If it rains and we have to 'rob' the onions from the land, you could have problems throughout the season, but we're not counting on that for the time being!
UK: Year of extremes for British onions
The British onion season is transitioning from last season’s onions to the new crop. The new crop should be available now. The growing season has been a real year of extremes, it was a wet winter from December to February, with 170% of normal year’s rainfall, it was dry enough in March to get the planting done, but the long period of frost in April halted growth in the plants. It has been better the last couple of months although more recently it has been dull, with lots of localised heavy showers. Despite this it's not looking too bad and average yields are expected, quality will depend on the weather though. Good sunshine with some rain is needed. The extreme weather makes it difficult for growers to be efficient or to make accurate predictions.
Input costs are going up for growers from fertilizer and seed to haulage and labour and these costs need to be met.
The Dutch planted acreage has increased by 11% and although the majority of onions will be exported to the African and Asian markets it may still affect the UK market to a degree if they fail to export the volumes due to the problems such as container availability and shipping delays.
Last year was an interesting year for sales with retail doing very well, while food service saw a huge dip due to the lockdowns. Sales patterns are returning to normal but it will take a few months to see if this has returned to normal levels.
Italy: Positive market for early onions
An operator from Northern Italy says that currently the onion market is not very dynamic. There are no significant transactions and prices are not very interesting. The harvest of the late yellow onion, which accounts for most of Italy's production, is highly expected. The situation is more interesting for the red and white onions. The market has been very positive for early onions, which have already been harvested and mostly sold. The operator has also seen Spanish product on the Italian market, which is not normal in this period. However, the same operator is selling red and white onions in France with good results.
A trader from Campania says: "Onion prices are in line with last year at the moment. We are currently working with early onions from Emilia Romagna. This is a good year in terms of quality, even if some fields have been damaged by the recent rain. In addition, we are working with medium sizes (50-80). The import will start in September.”
One particular type of onion, which is very popular in Emilia Romagna, is the Borettana, which is in the middle of harvesting at the end of July. An important operator from Reggio Emilia says that he has started exporting to the Netherlands and the UK, with good results. Yields are lower than in a normal year. This is probably due to high temperatures combined with a lack of rain.
In Sicily, the production season of the Paglina onion from Castrofilippo (Agrigento), a niche product, is practically over. It was characterised by abundant rainfall in June and this meant that the size of the onions, already large by nature, became really, really large, reaching 120+ size. This, however, penalised marketing somewhat. The total estimated production of Paglina onions in Castrofilippo is around 1,500 tons. Selling prices are in line with those of previous years.
Spain: Increased Spanish production lowers prices
The harvest of Grano onions is underway in the Spanish region of Castile-La Mancha. This year, growers are facing a start of the campaign marked by a significant increase in Andalusia's onion production. According to the latest data from the Spanish Ministry of Agriculture, Fisheries and Food, the acreage devoted to this vegetable has increased by 24.4% compared to 2020. That supply has been pushing down the prices of La Mancha onions. In addition to the increase in the production, the Andalusian campaign has overlapped with that of Castile-La Mancha. Andalusia had about 15 days during which it wasn't possible to harvest due to the rains and bad weather. This caused the stored varieties to overlap with the new ones from Castile-La Mancha, which started to be harvested about 4 weeks ago.
What customers demand, even in these early stages of the campaign, is a good skin, because the more skin an onion has, the longer it can be kept in storage. Producers in Andalusia, with more perishable varieties, have had to market their goods for very low, almost ridiculous prices, causing the price of onions in general to sink.
Andalusia's greater supply has coincided with a lower than expected demand in Europe, since the food service channel has not yet fully recovered, and there's also an important customer missing: Portugal, which had a larger production of its own and has greatly extended its campaign. Besides, at the beginning of Andalusia's season onions were imported from third countries, mainly large sizes from Chile and small and medium sizes from New Zealand. All these factors have caused the Spanish onions to be in a very difficult situation.
However, from last week on, things seem to start changing a bit for the onions from Castile-La Mancha, the main producing region in Spain and one of the most important at European level. Countries that demand large sizes, such as Germany or the United Kingdom, have already started switching, as Andalusia is not delivering very large onions. Andalusia produces more sizes 4 and 5, suitable for markets such as France or Portugal. Still, everything will depend on what happens in the Netherlands and Poland, where the harvests are in full swing. Prices like those of last season are not expected, but the demand is getting better.
Egypt: Good sizes and stable demand for Egyptian onions
The Egyptian onion season started out slower than usual, as the Indian onions were still in season. This caused demand to be low. However, after a while the demand increased and became steady compared to the Egyptian supply.
The sizes of Egyptian onions were 'really good' according to exporters, with most onions being above the 60mm size. Prices were similar to last season, but have increased over the past month.
Important markets for the export of Egyptian onions are Canada, Europe and South-East Asia, with Bangladesh being a target this year.
South Africa: Strong demand and lower volumes lift South African onion prices
An onion trader at the Johannesburg municipal market says that the onion price lifted by R5 (0.29 Euro) / 10kg bag on Wednesday morning as a result of strong demand and lower volumes; the average price in Johannesburg is currently R3.89 (0.22 Euro) per kg for the most common 10kg bag category.
In the Koue Bokkeveld (Western Cape) most onion producers have finished packing (those delivering to supermarkets pack a bit longer), while Limpopo and Northwest onion producers are now on the market with their winter onions.
Onion prices have been under pressure over the past few months as a result of high volumes (more hectares were planted in the north) and quality problems due to a cooler, wetter summer in the north which affected the ripening and drying process.
Within the next 2 to 3 weeks new onion plantings will start in the Koue Bokkeveld, an expected 3,000 ha over the region. Current winter rainfall will be decisive for the next crop.
Lockdown has stimulated home cooking and onion use.
China: Chinese onion market hampered by logistics issues despite strong domestic demand
The price of peeled onions on the Chinese market is currently around 600 USD per ton. That is nearly 200 USD per tonne more than around this time last year. There are three reasons for the high onion price. First, the overall surface area devoted to onion plantation decreased this year. In addition, domestic market demand grew stronger and the ratio of domestic sales has gone up. Second, the product quality of onions is substandard this season. The percentage of onions suitable for export is lower than usual. This pushes the price of top-quality onions even higher. And third, not only are the onions expensive, and the shipping cost huge, but the recent appreciation of the Chinese yuan has further weakened the interest of overseas buyers in Chinese onions. All of these factors work together to create a difficult market for Chinese onions. There is barely any demand from overseas markets and the order volumes are small.
The export price for #35-50 is 550 USD per ton. That is higher than around this time last year. The onions whose appearance is less than ideal are often processed into diced, frozen onion. The fluctuations in the market for diced, frozen onions are small because the shelf-life of this product is very long. Some importers who purchase for restaurants have recently switched to frozen onions because fresh onions are too expensive.
The shipping cost for the route between Qingdao and Europe is now around 8,500-9,000 USD per container. There is a serious problem with delays in port. Delivery speed has slowed down because there is a shortage of labour force in ports. The backlog in ports leads to delays, in some cases the products arrive 10-15 days later than planned.
North America: Onion markets to stay higher likely until new growing regions come on
Greater domestic production of onions is just around the corner. Currently, California and New Mexico are the main sources of onions. “California is still in the middle of its harvest and they do some storage of California onions. They’ll go well into the fall,” says a Colorado based distributor.
Following that, in approximately two weeks, Washington, Idaho, Oregon, Canada and New York will start with their volumes. “We are just about on the front end of a whole bunch of onions being available,” they continue.
What is undetermined is how the recent heat wave on the West coast affected, if at all, the onion crops of Washington, Idaho and Oregon. “They are expecting it to have an effect on yield. But at this point, nobody knows how much of an effect there will be. Even though the crop will start coming off here in a few weeks, the lion’s share of it doesn’t really come off until September. So, it’s about sizing but there could also be some crop loss.”
As for demand, it seems to be somewhat inconsistent. “It’s better this year than last year because for most places, COVID-19 is out of sight, out of mind. Foodservice business is back but not at 100 percent because of labor challenges. And retail continues to be as strong as ever,” continues the distributor.
The inconsistency seems to be almost month to month, they say. “June was one of the slowest Junes I can think of. May was super busy and July has been really busy. I’ve been doing this a long time and the market has always had a pretty nice flow to it. And now when it’s busy, it’s really busy and when it’s slow, it’s really slow. Nobody can quite put their finger on the ebb and flow of it.”
As for pricing, white onion supplies are tighter. “In most cases we have a $20 FOB market and that’s a strong market on whites. Reds are in the same boat with stronger pricing with $12 FOB on 25 lbs. And yellows have been an average market all year. In the last two weeks, reds and whites have really gone up.” They see this pricing and movement likely staying until the end of July, after which the newer growing regions will come on with product which will relax pricing a bit.
Meanwhile as many growers and shippers are experiencing across the country, there’s also frustration around truck availability to move onions. “When Canada, New York, Washington, Idaho and Oregon are ready to hit the marketplace with volume here in two weeks, that changes people’s buying habits. There’ll be a lot of options in two weeks,” they conclude.
Oceania: Onions become fourth most important export for New Zealand
Onions were one of New Zealand's dominant export crops in 2020, despite a slight drop in value from the previous year, according to the latest data. In 2019, the export value was NZ$170.3million, which dropped to $147.6m in 2020. However, this value is still up significantly on the five-year total, which jumped from $81.5m in 2015. It was the fourth-largest export commodity, behind kiwifruit, wine and apples. Europe & UK and Asia were the main destinations for NZ Onions last year. The report also showed that there were 85 growers nationwide, producing 235,175 tonnes, with domestic sales of the vegetable at $23.4million.
Meanwhile, in Australia, the retail sales growth rate of onions was 8.5% in terms of dollar value for the year ending March 2021, which was above the vegetable category as a whole at 8.1%. Volume sales growth was also up at 5.3% for onions and 4.7% for the vegetable category. The average dollar spend jumped from $25.09 to $27.13.
