Low Onion Prices of Major Asian Players, New Sources for European Markets

Prices of onions in the global market for 2020 have been on a declining trend since February as logistical issues from COVID-19 hindered trade amid lukewarm demand in major producing countries China and India. While demand has been better in the Americas, the recent onion salmonella outbreak could potentially impact the export situation of Mexico and the US. In Europe, the difficulties of Spanish production is thought to have given a boost to alternative markets such as Egypt and Turkey.

Recent trends of major exporting countries

China

Main varieties exported: Red Onion, Yellow Onion, Sweet Onion

In China, onions are produced across the country throughout the year, with red onions particularly popular in Southeast Asian markets such as Malaysia, Thailand, and the Philippines. There is ample availability of onions for this season as well as increases in planting areas, adding pressure to already dropping prices.

Domestic Prices of Chinese Onions. Source: Tridge

Prices have gone down from approximately USD 0.52 - 0.64 per kg in late February to approximately USD 0.18 per kg in early August. A large part of this is attributed to difficulties in logistics during the earlier stages of COVID-19 as exports were virtually halted. In addition, an inflow of onions from India has contributed to keeping the prices low, with prices forecast to remain at low levels as new batches of products are harvested.

India

Main varieties exported: Red Onion, Yellow Onion, White Onion, Pink Onion

India holds a unique position in the onion market as it is the second-largest worldwide producer after China, but with a large portion of its production volume going to the domestic market. In fact, Indian consumers are known to greatly prefer the strong and pungent flavors of domestically produced onions compared to imported counterparts. Nevertheless, India is still a major exporter and the country produces diverse varieties, the red onion is the most prevalent type.

Production for this season has been good due to optimal weather conditions. Currently, Prices of onions have been on a decreasing trend compared to the same period in 2019 but are currently at a stable point compared to the earlier stages of the pandemic when severe lockdowns were imposed. Indian onions are considered to be one of the cheapest compared to its counterparts. Despite some delays still present, however, prices are currently still at a considerably low point of USD 0.11 - 0.13 per kg for large-sized onions, USD 0.067 - 0.093 per kg for medium-sized onions, and USD 0.013 - 0.053 per kg for small-sized onions in the wholesale market due to low demand and the arrival of summer products.

Domestic Prices of Indian Onions. Source: Tridge

After the onion shortage last year from weather anomalies, the government has set a target inventory amount of 100K MT in anticipation of another price shock during the “lean” season from September to December. Prices during last winter went up to as high as USD 2.67 per kg before the release of stocks by the government brought prices down to USD 0.31 per kg. However, the stocks set by the government are mainly for the preservation of inventory for domestic use and have little influence on the export market of Indian onions.

Turkey

Main varieties exported: Yellow Onion, Red Onion

Located between Europe and the Middle East, Turkey holds a unique position in the garlic market in supplying onions to diverse regions. The Turkish onion harvest for this season was optimal with little impact of the virus on the production. Turkish exports of onions witnessed an increase late last year as Southeast Asian countries such as India, Bangladesh, and Sri Lanka experienced a severe shortage, hiking Turkish onion prices in January to higher levels than the last five-year average.

Domestic Prices of Turkish Onions. Source: Tridge

This led to the Turkish government imposing an export ban on onions in order to ensure sufficient supply in the domestic market, bringing down prices significantly. While prices continue to fluctuate, they have since settled for the most part. During the celebration of the Eid, the end of Ramadan, there was increased demand from countries that celebrated the holiday, and export prices are currently steady, although they anticipate the situation to be affected should there be impacts of a second wave of the virus.

Egypt

Main varieties exported: Yellow Onion, Red Onion

In Egypt, the yellow onion season runs from around February to November while red onions are sold from April to December. Currently in season, there is expected to be a good harvest of Egyptian red and yellow onions for this year. While importers in the onion market generally source the product from neighboring export markets, major export markets for Egyptian onions include not only the Middle East but also Russia and Europe, the latter of which is mostly re-exported through the Netherlands.

The production of Egyptian onions have been increasing each year, with the harvest volume for 2020 expected to be over 3.1M tons and exports doubling in 2019 compared to 2018, as well as planting areas, which are expected to rise by 5% and the Egyptian government has lent its support to onion growers.

With Spanish onions coming to a close and expecting reduced production as well as larger sized-products, decreases of production areas of approximately 8-10%, and COVID-19 related difficulties, producers of alternative sources such as Egypt and Turkey are expected to have the upper hand in supplying the European market. Egyptian onions are also gearing to increase its prominence on markets such as Russia, the Netherlands, Bangladesh, and also African countries.

Mexico

Main varieties exported: White Onion

The onion harvest of Mexico is conducted in two cycles throughout the year, for which the spring season lasts from March to June and the fall season from August to January. The most produced variety is the white onion, taking up 90% of total production, while the red and yellow varieties take up 7% and 3% respectively.

The volume of onion exports to the US, its main importing country, has exceeded the previous years by a significant margin, with nearly 80% increase from late April to mid-July compared to the same period last year. The demand for onions from the US has held steady, with the majority of it coming from retail stores ever since the start of the outbreak.

United States of America

Main varieties exported: Red Onion, White Onion, Yellow Onion

The onion production in the US could be seen as being relatively steady, with no anomalies in the weather. According to the Onion Business, the US had not been impacted severely by the coronavirus with its onion exports to Asian countries, as the season runs from August to January, and then supplied by New Zealand in the remaining seasons. Moving the produce throughout the country could be tricky, with the increased freight rates, but the foodservice industry is cautiously optimistic in reopening, which could handle the onions which start packing in August.

On the other hand, there has recently been an outbreak of salmonella across the US and Canada that has been traced back to red onions. As the number of outbreaks grows, the Public Health Agency of Canada has warned its citizens against consuming onions produced in the United States, which could decrease sales to the US’s biggest onion exporting market (63.5% of the export share in 2019).

Trade flow in recent years

As a staple product especially for Southeast Asian countries, onions have seen steady demand, with China dominating the trade flows, and Indian onions exerting a great deal of influence on supply in the Southeast Asian market. The onion crisis in 2019, however, has led importers such as Bangladesh to try to cease importing onions from India in order to prevent severe shortages and skyrocketing prices.

Trade flows have been limited during the early stages of COVID-19 as logistical jams made it difficult to export Chinese products and lockdowns in India slowed down exports. However, as of current, the trade situation has mostly gone back to normal.

Within Europe, difficulties considering Spanish onions have made way for alternative sources such as Egypt and Turkey to expand its reach within the continent. In terms of the Americas, the recent outbreak of salmonella in the US could act as an opportunity for Mexican onions to expand on their export market to Canada, its third-largest export market.