Global Market Update: Onion and Shallot

Published 2019년 9월 2일

The global supply of onions has been low this season due to adverse weather conditions. Major producing countries, such as India, have seen onion price increase significantly due to droughts and floods. The global demand for onion has been and is expected to continue rising steadily.

The HS Code for fresh or chilled onions are shallots is 070310

Price

As of September 1, 2019, the global wholesale price of onions is 9 USD per kg. Last year, prices in China were very low, which led to a decrease in harvested area. This year, however, the prices are higher than average due to low global supply. Prices in India and Europe are also higher than average.

Production

The top onion producing countries in 2017 were:

China (24.3 million tons)
India (22.4 million tons)
USA (3.7 million tons)
Iran (2.4 million tons)
Egypt (2.4 million tons)

The global onion production volume in 2017 was around 98 million tons, according to FAO. The onion production has been steadily increasing, with some dip years.

Supply and Demand

Currently, there is a low supply of onions globally. In China, this is caused by low onion prices last year, which led to farmers decreasing their harvest area. In India, this is caused by extreme weather conditions that have wreaked havoc on the onion fields. In Europe, the heatwave earlier this summer has caused the production to decrease. The demand for onions has been rising steadily, leading to increased global imports.

Export

In 2018, the total exported value of onions and shallots was 3.5 billion USD. The total exported quantity was 8.2 million tons and the market grew by 10%. The main exporters were:

Netherlands (676.1 million USD, 19.1%)
China (509.5 million USD, 14.4%)
Mexico (428.3 million USD, 12.1%)
India (421.2 million USD, 11.9%)
USA (231.7 million USD, 6.5%)

The total exported value increased in all countries except in India, where it decreased by 1% compared to 2017.

Over the last decade, the total exported value has changed as follows.

Import

In 2018, the total imported value of onions and shallots was 3.5 billion USD and the total imported quantity was 8.4 million tons. The total imported value increased by 5% compared to 2017. The main importers were:

USA (445.0 million USD, 12.7%)
Vietnam (255.1 million USD, 7.3%)
UK (229.2 million USD, 6.5%)
Malaysia (181.6 million USD, 5.2%)
Germany (171.8 million USD, 4.9%)

The total imported value increased in all the top 5 countries from 2018 to 2018.

Trends

Global Onion Supply is Low

The onion production in Europe is lower than average due to the dry, hot summer and the heatwave in June. This has significantly increased the prices of onions in the Netherlands, the top onion exporting country in the world. As a result, Europe is importing onions from China to check the onion prices.

In 2019, China is also expected to have a lower onion supply compared to 2018. In 2018, due to low onion prices, many Chinese farmers decreased their onion harvest areas, leading to lower production this year. However, the onion price in 2019 is higher than the average due to low global supply.

India to use its Onion Buffer Stock to Control Rising Prices

India has received 24% less rainfall during the first six months of 2019 compared to the 50-year average. This has caused a drought in India, which has significantly affected the supply and production of onions. As a result, in June 2019, the central government of India started creating an onion buffer stock of 50K tons to alleviate the expected increase in onion prices.

Besides the drought in the first half of 2019, floods in major onion growing states such as Gujarat, Maharashtra, and Karnataka have caused a further decrease in onion supply in August. The drought and the flood led to a 76% increase in onion prices in Mumbai. To combat the rising onion prices, the Indian Consumer Affairs Ministry has requested the state government to use the 50K tons of buffer stock to help with the shortage of onions and mitigate the rising prices.