W1 Onion Update: India Increases Buffer Stock in the 2023/24 Season, Indonesia Requests Onion Imports from India, Price Surge in Vietnam, and Pakistan Considers Onion Export Restrictions

Indian Government Boosts Onion Buffer Stock to 700 Thousand MT for 2023/24 Season

The Indian government has procured 25 thousand metric tons (mt) of onions from the 2023 Kharif season to maintain a buffer stock, raising its buffer stock target to 700 thousand mt for the 2023/24 season. The government procured 500 mt from the Rabi season in 2023 and is purchasing 200 mt of Kharif onion as the buffer stock target is raised. The government has offloaded 304 thousand mt of onion through the National Agricultural Cooperative Marketing Federation of India Ltd. (NAFED) and National Cooperative Consumers Federation of India Limited (NCCF) in the market to check prices, resulting in a 27.58% year-over-year (YoY) decrease in the all-India average retail price of onion to USD 0.51/kilogram (INR 42/kg).

Onion Prices in India Plummeted Due to Export Policies and Government Decisions, Resulting in a 60% Drop in Three Weeks

Over the past three weeks, the crash in onion prices could be due to various factors related to Indian export policies. The Indian government's decision to ban onion exports until Mar-24, starting from December 8, was a primary factor, causing a 60% price drop in less than three weeks. The ban was based on the delay in Kharif's arrival and the quantity of onion exported. The global shortage of onions and high demand from Bangladesh contributed to the strong exports. However, Indian export policies went wrong, with a 40% export duty imposed without a fixed floor price. The government introduced a minimum export price (MEP) of USD 800/mt on October 28, 2023, but removed the duty, allowing exporters to over-invoice. This made onion exports robust, especially after Kharif onions arrived in markets. Trade experts suggest India needed the MEP and export duty to control export volumes.

Indonesia Seeks 900 Thousand MT of Onions from India Amid Export Ban

Indonesia has requested 900 thousand mt of onions from India amid a ban on exports, as the country is India's largest trade partner in the Association of Southeast Asian Nations (ASEAN) and imports onions from the US, India, and New Zealand. India accounts for about a fourth of the global onion production and is the largest exporter after the Netherlands and Mexico. India exported 2.5 million metric tons (mmt) of onions in 2023, including 116.6 thousand mt to Indonesia. Indonesia is also a producer of onions, particularly small-size red onions. Due to the ban, the absence of exporters from markets has depressed onion prices, with further declines anticipated in the coming days.

Onion Prices Surged by 30% WoW Increase in Retail Prices in W1 in Vietnam

In W1, garlic and onions are experiencing a 30% week-on-week (WoW) increase in retail prices compared to the beginning of 2024. Soc Trang purple onions have also significantly increased in W1, rising by USD 0.82 (VND 20,000/kg) to USD 3.29/kg (VND 80,000/kg), while Northern purple onions stood at USD 3.90/kg (VND 95,000/kg). Despite slow demand, onion and garlic prices have remained high, with a profit of only USD 0.21 to 0.29/kg (VND 5,000 to 7,000/kg). This increase is due to the low prices of garlic crops in the early years, which led to a decrease in supply.

Pakistan Contemplates Onion Export Restrictions as Domestic Prices Surge in 2023

Due to a rise in domestic onion prices, Pakistan is contemplating restrictions on onion exports. While onions are crucial in the local consumer basket, current prices are still lower than in 2022. The devaluation of the local currency against the US dollar is impacting prices more than supply and demand. Pakistan's main onion markets include Malaysia, Sri Lanka, and the United Arab Emirates (UAE). In 2022, floods led to a significant onion import of nearly 500 thousand tons from Afghanistan, Iran, and Egypt. Imposing export restrictions may drive up onion prices in the Middle East, leading to increased imports from EU countries and making onion exports profitable even from Uzbekistan to the UAE.

Peruvian Onion Exports Surge in Late 2023 Due to High Demand in Europe

In the final months of 2023, Peruvian onion exports experienced a notable increase, driven by heightened European demand and an export ban affecting Egypt, a significant supplier. Peruvian onion shipments reached 227.2 thousand tons, amounting to USD 91 million. Although this represented a 12% YoY decrease in volume and a 2% YoY decrease in value, Spain emerged as an essential buyer, advancing from the third to the second position.

The US solidified its position with a 58% share, while Spain became a significant importer, acquiring 41.3 thousand tons for USD 22 million. This marked a substantial 24% YoY increase in volume and an impressive 91% YoY increase in value. Colombia, in turn, displaced the second-place position by exporting 46.4 thousand tons valued at USD 10 million.