1. Weekly News

India

Favorable Monsoon Conditions Prompt India to Remove Onion Export Ban

India has lifted its onion export ban, transitioning from "prohibited" status to "free" and setting a minimum export price of USD 550 per ton. This decision is attributed to favorable conditions for summer sowing due to an abnormal monsoon season. In effect from Dec-23 to May-24, the ban initially drove Nigerian onions' retail prices from USD 1.44 per kilogram (kg) to USD 2.39/kg (INR 120/kg to INR 200/kg). However, increased onion smuggling subsequently caused prices to fall back to USD 0.72/kg (INR 60/kg), with retail prices settling at USD 1.08/kg (INR 90/kg). Despite the ban, the supply of onions remained stable. The new minimum export price is expected to increase selling prices. However, some analysts suggest that the timing of the decision during India's national elections may have political undertones.

Mexico

Imperial Valley Faces Demand Pressure Amid Historical Red Onion Prices

Onion supply dynamics are shifting due to increased production in Mexico and storage of onions from the Pacific Northwest. This heightened demand pressure on the Southern California crop from the Imperial Valley, particularly for red onions which are experiencing historical pricing. Peri & Sons Farms plans to double its capacity this week as more supplies from California become available. However, downy mildew has impacted most of Imperial Valley, affecting onion sizes. While large-sized onions are scarce, demand remains strong, with favorable pricing due to increased growers and acreage in the San Joaquin Valley expected in Jun-24. The strong demand for yellow and red onions is projected to continue through May at historical highs, with some relief anticipated as the Central Valley/San Joaquin area begins harvesting summer sweet reds.

Philippines

PH-DA Considers Adjusting Onion Import Ban Post-Successful Harvest

The Philippine Department of Agriculture (DA) is considering extending or lowering the import ban on onions following a successful harvest season from Mar-24 to Apr-24. The onion industry recorded a 28.58% production increase in Q1-24, equivalent to USD 139.9 million (PHP 8.09 billion), higher than in 2023 which was USD 109.4 million (PHP 6.298 billion). The Agriculture Assistant Secretary said the DA will consult the Bureau of Plant Industry (BPI) to account for the actual supply on May-24. The increase in production can be attributed to a 40% increase in the land area planted onions from 2023. In Central Luzon alone, the onion production area is around 10.3 thousand hectares (ha) in 2024. The Philippine Chamber of Agriculture and Food Inc. (PCAFI) requested to import onions by May as the El Niño phenomenon worsened the effects of armyworm infestation. As of Mar-24, the infestation has affected 18 ha of onion plantation.

Spain

Spanish Onion Market Faces Stagnation Amid Oversupply and Import Competition

The Spanish onion harvest is encountering a stagnant market due to an oversupply of early domestic production clashing with import batches. Global onion supply has been lower than usual in the past two years, leading to high prices in international markets, particularly for extra-early varieties. In response, growers in Andalusia, Murcia, and Valencia have increased plantings for the free market, now overlapping with the last stocks in Spain and other European countries. Consequently, growers are struggling to market their onions. However, the quality of extra-early onions is expected to improve with favorable weather conditions.

Ukraine

Sharp Rise in Ukrainian Onion Prices Amid High Demand in W19

Ukrainian onions have seen an average price increase of 19% week-over-week (WoW), with high-quality onions now priced at USD 0.36 to 0.56/kg (UAH 14 to 22/kg). This increase is due to high demand and insufficient supply. Despite the price rise, onions in Ukraine are currently 58% cheaper than at the beginning of May-23. Market participants expect onion prices to continue rising as farm warehouse stocks deplete further.

2. Weekly Pricing

Weekly Onion Pricing Important Exporters (USD/kg)

Yearly Change in Onion Pricing Important Exporters (W19 2023 to W19 2024)

India

Despite lifting the export ban, onion prices in India continued to rise by 26.32% WoW from USD 0.19/kg in W18 2024 to USD 0.24/kg in W19 2024, maintaining an upward trend since 2023. This surge is driven by various factors, including supply chain disruptions, strong export demand, market speculation, political considerations, and production variability. Despite an estimated production level of 19.1 million tons in the Rabi season, logistical challenges and perceived scarcity have contributed to the price hikes. The recent revocation of the export ban is unlikely to immediately impact prices, as existing export commitments and market dynamics continue to exert pressure on local supply.

Netherlands

In the Netherlands, onion prices rose slightly by 7% to USD 0.13/kg in W19 from USD 0.12/kg in W18. Onion farmers have been facing significant challenges due to excessively wet weather conditions over the past six months, which have caused delays in sowing crucial crops like onions. This has hindered regular farming operations and the application of fertilizers, leading to supply constraints and subsequent price increases.

Mexico

The onion price in Mexico has significantly decreased to USD 0.35/kg, marking a 20.91% WoW drop. Onion prices in Mexico have been on a downward trend since January 2024, which is normal in the Mexican market due to seasonality. As the onion season in Northern and Central Mexico began in late April and May, prices are following normal patterns, decreasing as supply increases. The price in W19 of 2024 is the same as it was in W19 of 2023. Despite weather events like floods affecting some regions like Tamaulipas, prices have remained on a normal pattern.

Egypt

Over the past month, Egyptian onion pricing has fluctuated from USD 0.51/kg in W16 to USD 0.22/kg in W19, representing a 56.86% drop MoM. W19 2024 pricing is only 12.34% lower than pricing at the same time last year. Additionally, WoW pricing has dropped by 40.54%. The drop in prices can be attributed to efforts to incentivize exports after the export ban was lifted in April.

Spain

In Spain, avocado prices declined to USD 0.33/kg in W19, reflecting an 8.33% decrease WoW, a 21.23% decrease MoM, and a significant 40.61% decrease YoY. This drop is attributed to an oversupply of early domestic onions in the market, resulting in a stagnant market. Moreover, the surplus, coupled with subdued demand, has created challenges for growers, emphasizing the need for improved planning and the adoption of contract-based farming practices.

3. Other Outstanding Price Anomalies

South Africa’s Fresh Onion Prices Drop by 30.78% YoY Due to Global Market Dynamics

South Africa's fresh onion wholesale price dropped 30.78% YoY to USD 0.50/kg, a decrease from USD 0.72/kg on May-23. Since Jan-24, prices have remained below 2023 levels, with a 1.96% month-over-month (MoM) decrease.

The price drop is mainly due to increased global supply. Morocco's export ban to West Africa since Mar-23 and Egypt's lifted export ban led to a surge in Egyptian onion exports, especially to West Africa and Europe. The abundant Egyptian harvest of 1.8 million metric tons (mmt), with one-third for export, has lowered global prices, contributing to the decline in South Africa.

4. Actionable Recommendations

Fostering Collaboration and Communication

Given India and Egypt's decision to lift its onion export ban, stakeholders should prioritize promoting collaboration and communication across the onion industry. This includes engaging with government agencies, industry associations, and other stakeholders to ensure a smooth transition to the new export regulations. Establishing contingency plans and crisis management protocols can help stakeholders effectively respond to unexpected events and minimize their impact on onion production and distribution.

Monitoring Market Trends and Developing Risk Management Strategies

In response to the demand pressure on red onions in the Imperial Valley, Mexico, stakeholders should prioritize monitoring market trends and developing risk management strategies. This includes conducting regular market assessments, analyzing supply-demand dynamics, and identifying emerging trends or disruptions that could impact onion prices and availability. Implementing hedging strategies or price risk management tools can help stakeholders mitigate financial risks associated with fluctuating prices and optimize their profitability in the onion market.

Quality Assurance Programs

Implement stringent quality control measures to maintain the reputation of Indian onions in international markets. Investing in quality certification programs and infrastructure for sorting, grading, and packaging can help meet stringent export standards, enhancing market competitiveness and commanding premium prices.