The price level of onions on contract will increase in the coming season. The current price is minor, but there is a lot of uncertainty and speculation for the coming growing season. The processors seem to be preparing for a challenging season.
The two tenders are for delivery in December 2022 and for delivery in January 2023. For delivery in December 2022, the price is €14 per 100 kilos for yellow onions. For delivery January 2023, this is €15 per 100 kilos. "These are relatively high prices compared to recent years," Boons explains. "Especially when you know that the onions still have to be sown and the total acreage is not yet certain."
Area 2022 still unclear
Boons is referring to the high grain prices as a result of the war in Ukraine, which the choice for spring wheat proved popular among arable farmers last week. The question is this at the expense of the area of seed onions that these growers had in mind. This cannot be ruled out, given the increasing cultivation and storage costs and the shrinking range of available crop protection products for onion cultivation.
Boons is therefore curious how the final ball will roll. The onion buyers are serious, according to him, let the prices from the tender be reflected. "The contrast is special, because the current market prices of onions are lower than the prices for next season that are paid in the tender. While nothing is really certain about the 2022 growing season. It can also be an excellent growing year with high yields, with the will be a challenge to get them out." The volume of both tenders is limited, Boons says.
Hedging risk
Although the current market prices for onions of roughly between €11 and €12 per 100 kilos are not a big deal for growers to say the least, according to Boons the pre-sale prices for the 2022 harvest could be. To cover the risks, a grower can fix a volume at these prices to cover the costs anyway. "It's not a bad idea to opt for some certainty and hedge part of your onion acreage. Especially in these turbulent and uncertain times."