It's going slower than many would like, but the decline in DCA bale prices for onions is finally leveling off. Both growers and sorters are ready for this. There's still a lot of grumbling, especially on the processors' side, and the signals aren't yet green, but things are starting to shift in the onion market.
"We started way too high and are too expensive compared to the competition" was the gist of what sorters and exporters have been saying in recent weeks. Meanwhile, the bale price has dropped so much that the argument that we're too expensive hardly comes up anymore. In fact, exports are slowly starting to pick up. Of course, we have to remember that it's still July, and you don't handle large volumes during this period. The fact that several countries in West Africa are buying Dutch onions is a sign that onions in that region are running out or aren't meeting the quality demanded by local consumers. Incidentally, it's not just Africa that's in the market. Customers from Central America are also finding their way to Dutch exporters. Only Asia and the Middle East are still lagging behind.
What's done
Just because demand is picking up a bit doesn't mean prices will rise right away. Several sorters are still struggling with the onions they bought recently or under contract. A purchase price of €20 or €25 for the onions currently being harvested isn't unusual. How they're handling this varies considerably from processor to processor. Some say: "Just keep pushing through to get rid of the expensive onions as quickly as possible and hope things improve in a few weeks." Others pass on the expensive (set) onions and accept the fact that they'll grow extra kilos and then have to pay for them. Processors aren't exactly eager to buy more set onions. "It's cost a fortune so far, so we're just going to see how it goes for a while," says a packer.
The fact that processors are somewhat cautious is, of course, also related to the development of the growing season. The onions set were already early, and it won't be long before the first seed onions can be harvested. In terms of quality, a late onion set isn't necessarily inferior to an early seed onion, but once seed onions are available, buyers often prefer the latter. If a few more good export weeks follow, the seed and seed onions won't have to compete. Several growers are already anticipating this. There are, of course, outliers, but for a good Sturon or Centurion plot, prices of around €15 to €16 are being quoted ex-field. This certainly doesn't mean that prices will remain at this level, but the fact that growers don't want to drop much further, and processors are willing to go along with it, does speak volumes.
Distribution
The DCA onion bale price is taking another step down this week, but the drop is much smaller than in recent weeks. Overall, there are quite a few large onions in the set, but the proportion of super-sized onions is small. The supply of triplets varies considerably and depends on the sorting method. Some are a bit mischievous and use a 38-screen sorter for the 40-60 onions, resulting in no triplets. Other packers have customers who want 50-70 onions. If you're unlucky enough to get a slightly finer batch, you'll end up with a relatively large number of triplets and hardly any large or super-sized onions.
Read here is the explanation from DCA Market Intelligence on the new quotations.