The trade in field crops seems to be going nowhere in recent weeks. Sorters are struggling to keep up with developments on the farm in the bale price. That is causing some crooked faces here and there and onion processors making strange leaps.
Of course, it is a bit of the charm of onions that it is a market that can change quickly. If there is such a tipping point and the market starts to run as we have seen in recent weeks, it is always surprising how many people had foreseen that and anticipated it. Sorters, so to speak, all operate on onions that were fixed in January/February for €20 or less. Growers who had already sold the onions, to put it very exaggeratedly, all participated at the top of the stock exchange or sold the remainder for €40 in the last few days. These two stories do not entirely match, but they do make it difficult to make an objective analysis of the market.
What we can say now is that the group of growers who still have free onions is rapidly shrinking. The group who recently said no to a bid of €35 and later perhaps €40 is simply very stuck in the game. €50 on June is done according to insiders.
The fact that there are not many onions left at growers does not mean that they are finished. If we maintain the current export rate and we look at the harvest estimate of the CBS, we should end up well near zero. Without a large surplus or shortage.
Speculators have a considerable finger in the pie and have almost undeniably played a role in driving up the price as we have seen in recent weeks. There is still criticism of this, but neither growers nor processors have been worse off so far. The farmer has seen the price almost double in about five weeks. Armed with that higher grower price, sorters also dared to ask more in the bale.
In contrast to growers, several processors are somewhat more moderate in their expectations for the coming weeks. Five weeks ago, several sorters thought €20 for direct delivery was too expensive and €25 or €30 for delivery in April was completely crazy. You can now sense the same mood among sorters. Some (especially processors who participated nicely in March) dare to take a gamble and do something at €40 or more. Others are very careful with the onion stock they have. They would rather take it a bit easier now, be careful with the stock in the books, slow down sales and above all keep the margin on it. If we can hold out until mid or late May, we will see, that group reasons. This cautious attitude is certainly understandable, especially because later in the season there is often more competition on the European market from countries such as Egypt and New Zealand.
The DCA bale price onions has taken a big step this week. Supermarkets in particular stand out with prices of over €50. For a qualitatively normal but fairly coarse batch, the average bale price is low in the €40s. That is approximately equal to what is now paid for purchasing at the grower.
Read here is the explanation from DCA Market Intelligence on the new quotations.