Dutch onion market urgently needs lubricating oil

Although it is still too wet to go onto the land in many places, the first onions of this season have been sown on the light plots. Onion sets were already planted at an earlier stage (Monday January 23, 2017). The planting work was also continued this week. It area of ​​onion sets is expected to be lower due to a lack of sufficient planting material, which could offer opportunities for the sale of seed onions.

The quotations for yellow seed onions show a messy picture this week. With both the 30 percent to 60 percent coarse grading and the 60 percent coarse grading, the quotations are a mixture of rising and falling. The downward movement of the 60 percent coarse grading is particularly striking, because the interest in the onion country is precisely for the coarser gradings. The mood tending towards 'bland' underlines the increasingly difficult situation in onion country.

The transaction overview of the HOA (Holland Onions Association) shows that the business completed in week 10, which was contributed by the participating companies, was realized at a higher price level (7,42 euros against 7,30 euros) than in week 9. The traded volume fell from 8.610 tonnes to 7.205 tonnes. It is true that trading in the second half of week 10 took place at a lower price level than in the first half of week 10 (7,24 euros against 7,71 euros). Most volume was traded in the second half of the week.

A lot of creativity is required from sorting companies to be able to continue working/running. Margins are under considerable pressure, which reduces the incentive to pivot. Anyone who decides to temporarily stop sorting activities appears to have difficulty getting involved again. That's because getting your hands on onions is extremely difficult. Sorting companies that do have onions have more than once found it difficult to sell all sizes.

On balance, many sorters are empty, especially when it comes to sales of fine sizes. On average, 'break-even' is achieved when processing the coarse sorting. Marketing Dutch onions more cheaply is of no use in creating more sales, because the global demand for onions is on the meager side.

Dutch onions find their way to buyers in West Africa, among others, where mainly the fine sizes can be sold. Central America, a little bit of Brazil and the Far East (mainly Malaysia) are the other remaining customers outside Europe. Insiders wonder how long sales to Malaysia will continue, now that the availability of New Zealand onions is increasing. Last year, more than 10.000 tons of New Zealand onions were exported to Malaysia.

The sale of Dutch onions to Malaysia is limited this season due to the quantity available containers. Exporters who have onions but not containers have their backs against the wall. Moreover, the demand for more containers puts even more pressure on margins due to increased prices.

Spain is a notable one among current customers. Not so much because of the amount of onions that are exported there, because that seems not to be too bad, but because Spain is struggling with an extremely bountiful harvest this season. It did not seem obvious that there would be a demand for onions from Spain at all this season or that onions could be sold to Spain.

Photos @heyboerbv and @VCoolbergen