Onion exports are operating at a high level, but demand for medium and small sizes is lagging behind and putting pressure on prices. Sorters are struggling with sales and margins. Read more about the sales of medium sizes.
Exports are booming. 20.000 tonnes cross the border weekly, which is good for this time of year. However, pricing is lacking, making it difficult to generate a margin. Moreover, with the current supply, it is difficult to meet the high quality standards.
Triplets and medium onions are unsellable or barely sellable, according to various sorters. Stocks of these sizes are being cleared with great difficulty. This entails concessions on price, and that hurts, especially since it is already difficult to maintain a margin when sorting onions.
At the end of last year, onions were contracted for delivery in March and April at around 20 cents per kilo. Those volumes were limited, but are now weighing on the result because the market is lower. Part of the purchases was hedged in sales, but that does not apply to all parties. Additional funds are required for those, and new purchases must offset this.
The problem lies primarily in the sale of medium-sized onions. Up until January, Africa was the driver of exports, with strong demand for the 50-70 millimeter size. Many buyers have now switched to their own harvest. As a result, the demand for medium-sized onions from Africa is limited. Moreover, some buyers are now specifically asking for larger onions.
Morocco is full of Dutch onions
Morocco has provided a boost in recent weeks. Normally, this country is not a regular buyer of Dutch onions, but a domestic shortage led to increased import demand. Dutch exporters have fully capitalized on this. This sales channel is now fully occupied.
Some exporters expect Morocco to return later to bridge the period until the end of May or beginning of June. Demand may shift towards larger sizes.
Brazil is also entering the market. It is still unclear whether actual business has been done yet or if it remains at the stage of inquiries. The onions are relatively cheap, but transport is expensive. In addition, Brazilian buyers are requesting large, white onions. It might be possible to combine this with finer grades, but that is uncertain.
Hope for European demand for fine onions
Sales of large onions are going well. For finer onions, it remains to be seen whether European destinations will come forward.
Bale prices for large onions and supermarkets remain stable for the time being. In the market for medium-sized onions, however, it is a struggle. Prices vary widely, particularly for the 40-60 millimeter size, which is being sold at low prices. Some sorters indicate that they are temporarily unable to sell this size, putting additional pressure on the market.
Within the range of medium grades, bale prices vary from 10 to 19 cents per kilo. The lowest prices apply to lower quality and the 40-60 millimeter size. Higher prices are for good batches in the 50-70 millimeter size, where uniformity and coarseness also play a role.
Some sorters prefer to sell onions over 60 millimeters as 60-80 millimeters due to the price difference. Others manage to approach the price level of large onions with 50-70 millimeters. This widens the gap in sales. Virtually the same applies to triplets as to the 40-60 size, although the supply in that category is more limited.
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