Strong onion market shows first cracks

After weeks of almost continuous price rises, the onion market has paused for breath. The DCA Packed Onions Benchmark Price remains virtually unchanged this week. Medium-sized onions are fetching around €41 per 100 kilos, while large onions are bringing in about €5 more. Prices therefore remain at a high level, but for now the upward movement has stalled.The field delivery period is now almost over. The favourable conditions at the beginning of this week were fully used to harvest the last onions or deliver them directly. What remains in the fields here and there is largely due to quality issues.Fusarium and bacterial rot in particular appear to be more prevalent this season. Lots are being rejected by traders because of these problems. This poses a risk to the market. Lots that are less suitable for long-term storage need to be sold sooner, which could create additional supply at a time when demand is somewhat weaker.The problem is that Poland is hardly active in the market, if at all. Normally, poorer-quality lots find an outlet on the Polish market. High transport costs are an additional obstacle this year, making the price even more important. At the current high price level, Poland is therefore unlikely to provide much support to the market.The question is how much downward pressure the quality issues will create and, above all, whether good-quality lots will be dragged down with them. However, the supply of poorer-quality onions also has another side. Every lot that drops out reduces the volume of good storage onions available later in the season. With an already small crop, this could create additional tension later in the season.Foreign buyers are resistingFor now, however, the market remains calm. After the sharp price rises of recent weeks, the onion market is clearly taking a breather. Some price resistance had already emerged from Asia last week, and that now appears to be spreading somewhat.Whether this will be very temporary or last longer remains to be seen. Asian buyers are looking more actively for alternatives. Traders assume that Chinese suppliers are trying to attract buyers with lower prices. Still, Asian buyers have not disappeared entirely. Large Dutch onions were also ordered by Malaysian buyers last week.Brazil appears to have largely withdrawn from the market for now. The country had been an important buyer of large onions in recent weeks and therefore contributed to the positive sentiment in that segment.There is also somewhat more resistance from Ivory Coast. The country has bought large volumes of Dutch onions so far. A temporary pause is therefore not immediately a cause for concern. Some customers are skipping next week, but traders expect them to return a week later.Africa is taking a lot of medium sizesAt the same time, it should be noted that exceptionally large volumes of onions were shipped to Africa in the second half of September. This mainly concerns the 45/65 millimetre size. Export volumes were so large that, despite the relatively fine grading of the Dutch crop, proportionally more large onions were left available.This partly explains why there is somewhat more supply of large onions in particular. Whereas prices across all sizes rose almost simultaneously a few weeks ago, the market now needs to find a new balance between the different sizes.A decline is not yet in sightA decline in the onion market is therefore not yet in sight. The crop remains too small for that and export demand is still strong. For the first time, however, some resistance is emerging after the very firm sentiment of recent weeks. The coming weeks will show whether exporters can maintain the current price level or whether the market will stabilise for a longer period first.Quality is becoming an increasingly important factor. Problem onions could create additional supply in the short term, but every rejected lot reduces the supply of good storage onions available later in the season. This means that the quality problems currently putting some pressure on the market could eventually contribute to higher prices.