It's the small fraction of a cent that drives up the price of onions per bale every week. Exporters hope this will help them stay friendly with their most important customers.
Sorters say they have to raise prices because purchasing is becoming more expensive. It's the grower's price that forces them to raise sales prices. They have to tread carefully to avoid harming sales volume.
The rising price trend in the onion market is creating satisfaction throughout the supply chain. Naturally, growers are eager to raise their prices more sharply. Despite a large harvest, they're drawing confidence from the extremely high export volume. Sorters and exporters are putting on the brakes. They want to avoid a glitch that could negatively impact the export rate.
But all in all, everyone is happy with a rising market. And, the thinking goes, as long as that increase is gradual, buyers can get used to it. Customers absolutely hate it when it turns out they've overpriced. As long as those prices rise gradually, they won't find themselves in that situation.
Moreover, claims are less likely to be filed in a rising market. If customers reject a shipment and have to buy different onions, they'll pay more than the product they just received. Therefore, the longer this situation can be maintained, the better for sales volume. This is crucial, especially with the traditionally peak export weeks ahead.
Very dependent on Africa
Dutch exports during this period are heavily dependent on sales opportunities in Africa. However, the population is growing, and in some countries, per capita consumption is also increasing. But if, for whatever reason, those sales start to sluggishly slow down, it immediately creates a major problem.
A recurring annual concern is Senegal's dropout in January. If the borders there close to imported onions to protect their own harvest, other markets have to be stimulated to keep onion sales going.
Spain and Portugal are starting to arrive now, so there might be more onions available there early in the season. We're missing Poland quite a bit this season. That country created a solid base in the market last year by quickly absorbing lower-quality onions at prices that truly set a bottom.
So far, Poland hasn't explicitly expressed its interest. They have a smaller harvest themselves, but according to reports, all the onions they do produce are of the desired grade. Slowly but surely, Poles are starting to inquire more about onions from the Netherlands. However, prices in Poland are low, and therefore they offer little for Dutch onions. They are only willing to pay 3 to 4 cents per kilo, making the bids too low to stimulate the flow.
Major drivers
For now, exports are primarily focused on Africa, with Senegal and Ivory Coast as the main drivers. In week 42, these two West African countries accounted for total sales of around 20.000 tons. This contributed to another week with exports exceeding 40.000 tons. This is now the fifth week of the season, which is unprecedented.
High exports and rising grower prices have contributed to the bale price for most onions rising to 24 cents per kilo. Larger onions are fetching slightly more, while prices for triplet onions are lagging behind.
Read Here the explanation from DCA Market Intelligence on the new quotations.