Large production capacity is now hindering the onion market

In the first half of the marketing season, the Dutch onion chain has been able to make good use of the enormous processing capacity. Large quantities have been exported at record speed. That capacity is now somewhat hindering sales. Companies are operating at half capacity or even less. To keep things moving, they are adjusting prices. According to various parties, the Netherlands is not selling any extra kilos of onions by lowering prices. On the contrary, sales are slowing down in this declining market. Buyers are therefore afraid of overpaying and wait as long as possible before purchasing new batches. They first deplete their stocks and then reassess what is urgently needed. This development is slowing down sales, which had previously been progressing so smoothly. Until just after the turn of the year, there was a strong demand from abroad. However, some large customers from Africa are now dropping out to protect their own onion sector against imports. Senegal closed its border in mid-January and Gambia will close on March 1. The latter effectively means that no onions can currently be sent to the country, due to the time it takes for ships with containers to dock there. The closure of markets is not new information; it was largely known in advance. Sorters, packers, and exporters had known for months that, during January, the demand would halve due to the drop-out of large customers. This is also not new this year; it happens every year again. The question remains, however, how many onions those customers will still purchase in January. However, Dutch processing capacity remains large. While some adjustments can be made with temporary labor, the machines are in place for the entire season. To keep the machines as occupied as possible, companies are competing for the last sales, focusing on who is willing to lower their prices the most. Prices for packed onions partially down We also see that the DCA Benchmark Price for Packed Onions is going down this week. Still, there are differences between the participating companies in these ratings and also between the different sizes. Some companies have processed somewhat larger batches in the past week. As a result, they have slightly larger sizes to sell and less of the very fine size. The consequence of this is that prices for large onions are dropping somewhat due to the larger supply, while they are somewhat tight on the finer onions. Companies that have ample stocks of the finer sizes are trying to sell these onions more quickly because they want to reduce their stocks amidst declining sales in Africa. For the size 40-60 millimeters, most companies are quoting prices of 18 to 19 cents per kilo. Prices for the 50-70 millimeters sorting mainly lie between 18.5 and 20 cents per kilo. The majority of companies report prices for the medium size of 18 to 19 cents, resulting in an average of 18.5 cents this week. Large onions are selling in most cases for 21 cents per kilo. Sales to England seem a bit more difficult, as they received a relatively large volume there in recent weeks. In week 2, more than 4,000 tons were sent there, and substantial volumes were also sold in weeks 3 and 4. To work through the stocks, the demand seems somewhat less this week. This makes prices of 22 and 23 cents per kilo harder to achieve. Jumbo onions are quoting around 25 cents per kilo. A few are just below that, while others are asking a bit more. The prices for the three-packs also vary somewhat. Price quotes here range from 13 to 16 on the lower end to 19 to 20 cents on the upper end. This is mainly related to how much stock the companies have in this size and the sales opportunities they have for this product. Companies with excess stock are pushing down the price, while those with tight stock are asking for a bit more.