Inside: Onion Market
Hopelessness creeps into onion market
The signals sent out by the Dutch onion market leave nothing to be desired in terms of clarity. At least so it seems. The shortage of demand for onions on the global onion market is being expressed by more and more exporters. The core of the lack of onion demand is hidden in the good onion harvests of important buyers for the Netherlands. So it is your own harvest that counts first.
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Choose the subscription that suits youWhile an attempt was made a few weeks ago to increase the margin for an entire batch by sorting and trading the coarse onion grades, this now seems to be increasingly difficult. Disposing of the fine grades of onions is becoming increasingly difficult and appears to be costing money on all sides. It makes the onion trade extremely cautious.
The current market situation is giving rise to a spring 2005 scenario in the corridors. However, the 2004/2005 season had a completely different price trend, as can be seen in the graph below. In the second half of the 2004/2005 season, 358.233 tons of onions were exported, an average of 12.794 tons per week. Ramadan was celebrated in 2005 from October 5 to November 3. The average stock exchange quotation in the first half of calendar year 2005 was a price of 0,34 euros per 100 kg.
Guessing
It is difficult to draw parallels, because we can only guess at how many onions will be sold in the period up to the end of the 2016/2017 season. What is known is the difference between the amount of onions that have already been exported in the first weeks of 2017 and 2005. And that is up to and including week 9: 69.989 tons (2016/2017 => 168.565 tons; 2004/2005: 98.576 tons), so a plus of more than 70%. In 2017, Ramadan is celebrated from May 27 to June 24. Although the chance is small according to insiders, additional demand cannot be completely ruled out.
At the same moment
Graphically, this season has more in common with the 1995/1996 season (see graph). Then the market buckled at almost the same time. The average stock exchange quotation in the first half of calendar year 2006 was 3,99 euros per 100 kg. The 1999/2000 season also shows similarities. The 2004/2005 and 2011/2012 seasons have been in a minor mood for much longer and are therefore further removed from the current season. There are also signals that a number of traders appear to be throwing in the towel.
The biggest pain point for sorters and exporters is the sale of fine grades. If customers already come forward for fine onions, the Netherlands will dump them en masse, with all the consequences that entails. The prices achieved here no longer have anything to do with the market and, in the most extreme case, fall below the 5,00 euro level. In the eagerness to receive orders for the fine onions, they are not even allowing each other to lose, insiders report.
Pressure on the bale price is increasing
Unfortunately, the unrest at bale price levels is of no benefit to the Netherlands. No new business will result from this, which will only increase the pressure on the bale price. Sorting companies that do not have their own sales channels are increasingly coming to a standstill. Growers with fine onions also notice that traders give them a wide berth. You cannot decently submit a bid because there is no interest, as can be heard in the corridors.
Repacking exports
The export figures underline the slow pace of onion sales. With 11.784 tons, week 9 is the second lowest of this century. The prospect of resuming exports seems to be becoming increasingly remote as time passes. In summary, this means that the Dutch onion market is in a very difficult phase, where the credo 'every man for himself' predominates.