'Be wary when others are greedy and become greedy when others are wary.' This statement by Warren Buffett refers to the stock market, but it applies one-to-one to the onion market. The downward trend that started about two months ago creates a completely different dynamic. In some cases, growers and sorters may go too far.
Until well into February, there were plenty of growers who insisted on getting a five for the onions. It is now mid-April and the question is whether we will be able to keep a two ahead.
As befits the onion trade, different players have different interests. There is no harm in taking affirmative statements with a grain of salt. One thing is clear by now. Confidence in the onions has not suffered a dent, but has completely disappeared. Sorters try to keep the working inventory as small as possible, because what you think you can buy now may turn out to be too expensive next week. Growers also see that prices on the regional fairs are falling and are making offers before the market drops even further. Last year the flywheel started to swing upwards after the Fruit Logistica in Berlin, but this year things are turning in exactly the other direction.
Wishful thinking
How buyers and sellers behave under such different circumstances is difficult to explain rationally. In January, there were still plenty of growers who rejected offers of (high) €40 because the onions had to yield at least €50 this year. To put it bluntly, buyers now determine the price and the grower likes it or not. With grower prices dropping towards cost price and the mood not exactly improving, there is certainly something to be said for going along with this as a farmer. It would be better for the market to provide a more gradual supply as growers, but as an individual farmer it is logical that you are not left with unsellable onions at the end of the journey. Somewhere you would expect someone to slam on the brakes and say: there is no point in lowering any further. Getting rid of more onions doesn't help. That might also be a bit of wishful thinking.
In such a declining market it becomes clear that selling in the long term is not without risks. Rejection occurs every week, even for cells that were purchased only a few weeks ago. There is a lot of finger pointing. Whether this is correct in all cases is another matter, but in any case it will not improve mutual relations.
De DCA quotation Bale price of Onions is also taking a big step back this week. The price differences remain large. The most striking thing this week is that it is now in the larger sizes that the hardest blows fall.
Read here is the explanation from DCA Market Intelligence on the new quotations.