Onion export breaks records, what does the second half look like?

Over the past 10 years, sales of Dutch onions have made a significant turnaround. Where at the time 40% of the onions were exported in the first half of the season and the second half accounted for 60% of the total exports, the reverse is now the case. Today, two-thirds of sales take place in the first months of the season. That also seems to be the case this season, although this season can be called special. The Netherlands is normally the gap filler in the world when it comes to onions. That hole is now a crater. In short: there appears to be more demand for onions than the Netherlands can meet. The result? One after another export record is broken and we are now considerably ahead of last season.

Positive outlook, but price will be decisive
The second half of the season, on the other hand, is usually less glamorous. It is expected that from January 1, approximately 14.000 tons per week will have to be exported to maintain a top season. And although that figure is considerably lower than the 35.000 tons of last week, it is a normal result for the second half of the season. This is because Senegal then markets its own harvest and closes the borders to Dutch onions. In the second half of the season we will therefore have to rely on more unexpected sales. You can think of Brazil or this year Spain, where the own harvest is less than expected.

Experience shows that prices are very decisive. Currently the bale price is around €25 to €26, but if that price rises to €30 or higher, exporters expect that problems will arise in exports. Exports will be more difficult, especially in the second half of the season, because the number of sales markets is considerably smaller during that period. This has happened more often in recent years and alternative, cheaper countries are given preference. Even if quality has to be compromised.

All in all, the sector is positive. It remains difficult to make a prediction for the short term due to the uncertainty caused by the corona crisis, but exporters do not foresee any major problems in the second half of the season so far. After all; an export figure of 14.000 tons does not cause any headaches. There is also little fear surrounding Brexit. According to exporters, England will remain a customer, because its own harvest is insufficient to match consumption. The Netherlands also exports to almost 140 countries, most of which are third countries, which means that we are used to the extra rules that a no-deal would entail.

How long will India keep its borders closed?
In addition to the corona crisis and Brexit, the sector is concerned with India. Due to climate change, many onion crops in the country have failed, causing prices to rise excessively. In the supermarket prices are quoted from €0,91 to €1,14 per kilo, depending on the quality. It is one of the reasons why the government has decided to impose an export ban. Our own population must first get something to eat before the rest of the world is supplied. A great opportunity for Dutch exporters, because who would have ever thought that our biggest competitor would relax the rules to import onions? The countries that India usually supplies have also become 'free'. This often concerns less popular destinations for shipping companies, because this is not return freight for the reefer containers.

It is difficult for exporters to predict how long this situation will last. It was recently announced that the Indian state of Telangana will face an onion shortage in January if the government does not intervene. According to the traders, only timely imports from countries such as Egypt, Turkey and Afghanistan can prevent this. The Netherlands is less interesting in this case because of the higher price range. Looking at those reports, there is a chance that the export ban will remain in force for the time being, but exporters are hesitant: "in these types of countries, a situation like this can suddenly change." The motto is to take advantage of it now, because dips will probably occur later in the season. That's the case every season. It is not without reason that they say that the devil is in the tail.

Availability of containers
One of those dips could be the availability of containers. The fact is that the corona crisis has thrown global 'container flows' into disarray. As a result, worldwide exports are declining, so there are fewer containers and therefore the rates are even higher than they already were. It does make a difference whether you have fixed agreements or always look for the cheapest container at the last minute. In other words: the onions are already quite pricey and a higher rate for the container results in a higher total price. Something that we said earlier could have a negative impact in the second half of the season. But if you look at the prices for onions in China and India, they are also high. This allows us as the Netherlands to remain competitive.

All in all, this positive thought predominates, even when we look further into the future. For example, exporters expect West Africa to remain a growth market for Dutch onion exporters. The population there is constantly increasing and they will continue to consume onions in the coming years. Even further into the future is the hope that the Chinese market will finally become available for Dutch onions. The east coast of Africa is also interesting, but logistically and politically still difficult. In short: there is still plenty of perspective for the Dutch onion market.