The demand for onions for export is not the problem, it remains very good. However, confidence in the market is not high in the slightly longer term. It seems as if no more onions will be sold after Christmas if you look at the trade. Are sorters running out of work stock or have growers with onions suitable for Africa missed their chance?
Growers and processors have found a good balance. After two years in which the onions were not doing well, both growers and sorters have now been brought back down to earth. In the past, it has happened more than once that good years were followed by very bad years, but so far that has been somewhat acceptable. The price from the land was below €10 for a while, but €16 is now no exception. If you then harvest 50 tonnes, you are talking about a gross yield of €8.000 per hectare. With the increased cultivation costs - partly due to the thinned-out package of resources - that is certainly not a goldmine for the grower, but the directly attributable costs are more than covered.
Sorters can have a field day these weeks. Demand is good and prices are at a level where you don't have to worry about how everything has to be pre-financed. Some grumble a bit about the meager margins, but if you've participated a little in every buying round, it's not that bad on average.
Buyers should exercise caution
There is not much enthusiasm among growers or sorters to do something in January or later. Usually, demand from Africa decreases somewhat after New Year's Eve and nobody wants to be left with onions that turn out to be too expensive. The time to do something before Christmas is slowly running out. Many processors have more or less completed their work stock for the coming weeks. We can note that there are still some losses due to quality problems. Buying more onions is not the biggest problem in such cases. That is a first sign that the buying round for December could well be far behind us.
The fact that buyers are hesitant to buy for the long term is almost a common thread throughout the current season. Because sorters play on the ball, they have to go to the farmer every time there is demand. This keeps the growers busy every time, and they in turn keep the price in check. If demand from abroad continues, this system can easily be maintained after the turn of the year. If demand collapses, the onion market can also easily fall back. It is simply impossible to predict which way it will go.
The DCA Baalprijs onions also continues its upward path this week. The bottom of triplets is at €20 and that goes up to €28 at the top for the nice white supers suitable for Europe.
Read here is the explanation from DCA Market Intelligence on the new quotations.