The current weather conditions have contributed to the onion market being full of (price) expectations. What has been achieved so far in terms of business done, and is there a ceiling on prices on the onion market?
The dry weather has affected price expectations for onions. The growers' idea is: lower yields will almost automatically lead to high, and possibly very high, prices. In addition, the cultivation costs (due to irrigation) has risen considerably, which means that prices will have to rise.
From the seller's point of view, this is all easy to follow, but there is also another side of the coin. That is the view of the buyers of Dutch onions. Do they buy onions at any price?
Area figures from CBS
CBS made it at the end of June the area figures known for its planting and seed onions. It seemed to put a damper on the growth of the onion onion area. This was reinforced by the end of the 2017/2018 season, which resulted in many onions being disposed of at little or no cost. Even then there was already a period of little precipitation, a situation that does not exist in July changed.
In addition to the drought, the temperature has also made itself heard. The drought and heat have (on average) made buyers take action late. In recent years, many sorters have been 'spoiled' with being able to easily get their hands on onions, and thus the working stock.
The 2018 crop year is different
At least that's different so far. The growers want compensated be used for lower yields and higher cultivation costs. However, asking for money is a difficult task with the current state of knowledge. Because what do you have to sell?
Where onions were traded for around €11 at the end of May (dry from the shed delivery, January 2019), prices ex-field have risen to approximately €20 per 100 kilos. Business has also been done on a limited scale for €25 per 100 kilos (delivery dry from the shed in the last week of October). Buyers are currently dropping out for €25 ex-land. Not so much because people think it is too expensive, but because the onion market first has to develop.
Various forms of contract cultivation have been concluded in the onion sets, so that the sorters have something of a 'mouth supply'. If demand picks up in August, which is historically the case, then the question is where to look for supply. It is difficult to purchase from a regular grower.
More clarity about Senegal
Exporters hope to receive more clarity next week about when the Senegalese border will open to Dutch onions. For Ivory Coast an extra boat will be loaded next week and more sales to Mauritania seems to be a matter of time. It is difficult to estimate to what extent exports will suffer from the extreme conditions in the Netherlands. The price level will cause buyers to look for alternatives. Whether that will provide sufficient relief remains to be seen.
Current sales are largely focused on Europe. Gradually some onions are sent to destinations in Central America and Africa. All in all, it will be an exciting season. There will be fewer onions to sort, a decline of approximately 25% to 30% could easily be a reality and they also have a fine sorting.