W49 Onion Update: European Union Onion Supply Shortages, Climatic Weather Challenges, and Increasing Global Onion Prices in 2023

Declining Volume of Peruvian Exports from Jan-23 to Oct-23 Amidst Climatic Challenges and Global Demand

The global market for fresh onions is volatile due to major climatic events, with Peru exporting 186.9 thousand tons for USD 74 million between Jan-23 and Oct-23. Limited stocks and stable demand have led to better prices at USD 0.40 per kilogram (kg), but not enough to offset the drop in export volume. Ica remains the leading exporting region with a 53% market share, followed by Libertad with 24% and Arequipa and Lambayeque with a 10% market share each. The United States (US) remains the primary destination for Peruvian onions, with healthy demand but limited imports. Peruvian producers have been unable to export similar volumes to 2022, falling by almost 25% year-over-year (YoY). In Europe, shortages are reported due to mediocre internal campaigns, with regions like Toledo and Andalusia experiencing reduced supply due to natural disasters. Peruvian shipments have grown considerably in this region, with a 24% YoY price growth.

European Onion Supply and Quality Concerns in the 2023/24 Season

In 2022, Europe experienced a shortage of onions, necessitating increased imports to meet the demand for this essential vegetable. New Zealand increased its onion acreage, resulting in a strong import season. The Spanish onion season continues with good prices but low demand, with sales resuming as the Christmas holidays approach. Onion acreage in Spain increased by 15% in the 2023/24 season, and the harvest has increased by 10 to 12% year-over-year (YoY). However, there is uncertainty about the quality of the onions stored in warehouses, which could affect the supply volume and the ability to maintain supplies until the end of the season.

The limited shelf life of onions is significantly influencing the 2023/24 onion season in Europe. The region has been grappling with reduced supplies and faces export restrictions from key onion-producing countries like Egypt, Turkey, and India. The challenges from the previous season persist, particularly in the southern regions, which are major onion cultivation areas. Adverse weather conditions, such as heavy rains and high temperatures at the start of the growing season, are anticipated to impact crop yields, potentially increasing onion prices. Farmers are also working to eliminate low-quality onions, affecting market volumes and contributing to fluctuating prices.

Despite prices being 3.7 times higher than last year's period, concerns about a shortage of quality onions towards the end of the season persist. Due to its profitability, Ukrainian farmers are gearing up for mass onion cultivation, and prices are expected to start declining in June. However, the upward trend in onion prices continues, with market operators cautioning about the potential scarcity of quality products later in the season. Additionally, unfavorable weather conditions have led to a significant decrease in onion production in Ukraine, resulting in a higher proportion of non-standard onions with limited storage capabilities. Experts foresee the need for onion imports to Ukraine from countries like Egypt and Iran after the New Year to meet demand.

Surge in French Onion Demand Amidst Climatic Challenges in the European Market

The French onion market is experiencing a surge in demand due to drought conditions, with domestic supply being abundant. Yellow onion yields have generally increased in France, but late rain showers in the north have affected yields. Northern European competitors, including the Netherlands, face challenges like heavy rain, fusarium pressure, and wet harvest conditions. Despite these challenges, the number of harvested fields is higher than in 2022. The European market is also facing difficulties, with the Netherlands experiencing a 3.7% YoY increase in onion area, Spain facing severe drought, and Germany facing water availability issues. Organic onion yields remain stable.

Increased Wholesale Prices of Moldovan Yellow Onions During Dec-23 Amidst Export and Storage Reduction

In Moldova, wholesale prices of yellow onions have resumed after a two-week decline in Nov-23. The average weekly price increase was 10 to 15%, reaching USD 0.28 to 0.34/kg (MDL 5 to 6/kg) by the end of Dec-23. The growth is due to a reduction in high-quality onions in storage, a decrease in commercial chain life due to colder weather and precipitation, and some vegetable farms exporting onions to the European market for processing. Operators of the fruit market predict that the rise in onion prices this winter will continue.

India Implements Onion Export Ban Until Mar-24 to Increase Local Demand and Regulate Prices

The Indian government has banned onion exports until Mar-24 to increase domestic availability and control prices. Local onion prices in New Delhi stood at USD 0.84 to 0.96/kg (INR 70 to 80/kg). The government has previously imposed a minimum export price (MEP) of USD 800/metric tons (mt) on onion exports from October 28 to December 31, 2023, and a 40% export duty on onions until December 31, 2023. However, onion exports will be allowed based on permission granted by the government to other countries at their request. Between Apr-23 and Aug-23, 975 thousand mt of onions were exported from the country.

Chinese Onions Dominate Bangladeshi Markets in Dec-23 Amidst Indian Supply Decline

Chinese onions are gaining popularity in Bangladesh wholesale markets on Dec-23, surpassing Indian and Myanmar varieties. The Chinese onion prices stood between USD 0.45 and 0.50/20kg (BDT 50 and 55/20kg). Restaurateurs prefer larger Chinese onions due to their lower price. Meanwhile, The Indian onion supply in Bangladesh is decreasing, leading to an increase in onion prices. Additionally, India has extended export restrictions on onions to Bangladesh, resulting in a price surge of USD 0.18 to 0.23/kg (BDT 20 to 25/kg). In response to support local farmers, the Bangladeshi government has suspended onion imports from India, further intensifying the country's upward trend in onion prices.

Onion Imports in the Philippines Surged in Dec-23 In Response to Rising Prices and Anticipated High Demand

To prevent further increases in onion prices, the Philippines plans to import a substantial amount of onions. The Plant Industry Bureau will issue import permits to private companies, allowing them to import 21 thousand tons of onions by the end of 2023. This measure aims to ensure sufficient stock, especially with an anticipated rise in demand during the festive season. Earlier in 2023, the Philippines had to resort to onion imports due to price hikes caused by a shortage that began in late 2022. Some lawmakers attributed the rising prices to hoarding and price manipulation by traders. The country has a monthly onion consumption of about 17 thousand tons.