It became clear last week that the January dip on the onion market was short-lived this season. Hardly anyone had foreseen that the roof would come off this week. €70 participates almost as if it were nothing. Compared to the stock exchange listings, the price is even higher if you consider that it is not uncommon for gross = net agreements to be made.
The demand for Dutch onions has not suddenly increased spectacularly and sorters are not busy. You would say that there is no immediate reason for the onion market to suddenly rise. And yet that is what happened. At the regional fairs Middenmeer and Emmeloord, the top price for large onions was €55 per 100 kilos. However, only limited trade is conducted for direct delivery. Most of the business is for onions in the long term and a price jump was made there. "Normally it goes in pennies, but now the market is suddenly rising in pennies, really unprecedented," said a trader. Various transactions of €70 gross=net have now been verified for delivery in April and later. Let's conservatively estimate the tare percentage at 7%, then the net amount for the sorter is €70/0,93≈€75. That's some serious money. Growers with free onions are now also asking €70 for delivery in March, but the trade is still very cautious about this.
Panic purchases
The fact that the grower price has taken such a step comes as a surprise, but can be explained to a certain extent. The stock of truly free onions has shrunk considerably. Both growers and sorters are all too aware of this. If one sheep crosses the dam and more follow, the price can quickly move up.
Sorters are afraid of making a mistake later in the season, stick to the course of the season so far with a rising market and try to outdo their competitors. For some, this almost results in panic buying. We should not underestimate the role of speculators. With just a few transactions, they can strongly influence the market. Some market players complain about the speculators. However, there are also several sorters and farmers who view speculators more positively. They pushed the price higher and took on some of the risk. Both growers and sorters can benefit from this if they have at least paid attention and played the game.
The DCA quotation Bale price of Onions is taking a big step up this week, but is having difficulty following grower prices and the spread is remarkably wide. The demand for triplets and medium is disappointing. Buyers mainly want coarse and supers. Sorters and exporters are struggling with sales prices. Some who have limited stock charge a lot of money for it and don't mind if sales fall through, while others who have to rely on a large part of their regular customers are more likely to compromise to keep everyone happy.