W7 Onion Update: India Resumes Limited Onion Exports, EU Faces Prolonged High Prices Amid Supply Challenges

Published 2024년 2월 23일

In W7 in the onion landscape, India, the world's second-largest onion exporter, has lifted its four-month ban on onion exports, opting for controlled G2G transactions to specific nations after concerns about domestic price fluctuations and regional stability. Meanwhile, the EU continues to grapple with elevated onion prices as Red Sea tensions disrupt shipments and key suppliers like Egypt extend export bans, tightening supply. Furthermore, Central Asian countries offer competitive prices, concerns about quality and storage linger, leaving EU importers wary. With harvests in major EU producers delayed until mid-Apr-24 and high costs expected to persist, the EU onion market faces a prolonged period of elevated prices.

India Resumes Limited Onion Exports Amid Domestic Price Concerns

Following a four-month ban on onion exports implemented in Dec-23, India has resumed limited onion exports to specific countries on a government-to-government (G2G) basis. This decision comes amidst concerns regarding domestic price fluctuations and the impact on neighboring countries. The world's second-largest onion exporter, India imposed a complete export ban due to concerns about rising domestic prices and potential shortages stemming from adverse weather conditions that impacted crop yields. This decision resulted in significant price hikes for onions in neighboring countries, prompting India to implement additional measures, including a 40% export duty in Aug-23 and a minimum export price of USD 800 per metric ton (mt) from October 28, 2023 onwards, to address under-invoicing issues.

The Indian government has authorized limited G2G onion exports to select countries, including Bangladesh, Sri Lanka, Mauritius, Bahrain, Bhutan, and Nepal. This measured approach aims to balance the need for addressing domestic price concerns while mitigating the negative impact on traditional export markets and regional price stability. This export model offers greater control over export volumes and pricing, potentially mitigating concerns about under-invoicing and ensuring fair market practices.

Persistent Factors Driving High Onion Prices in the EU

Onion prices in the European Union (EU) remain elevated, and recent developments suggest that these high prices might persist longer than initially anticipated. Disruptions in the Red Sea have forced ships to reroute around Africa, significantly extending the delivery time and increasing transportation costs for onions imported from New Zealand and other Asian countries like India and China. Egypt, a major onion supplier to the EU, has extended its export ban, further tightening supply and exerting upward pressure on prices.

While Central Asian countries like Uzbekistan and Kazakhstan have large onion reserves at competitive prices, concerns regarding potential quality issues due to inadequate storage facilities and recent adverse weather conditions pose risks for importers. The first harvests in key European producers like Spain and Italy are not expected until mid-Apr-24, limiting domestic supply options in the near term.

These combined factors will likely prolong the period of high onion prices in the EU market. The first influx of onions from southern Spain in mid-Apr-24 is expected to remain expensive due to existing market conditions. Similarly, the Italian harvest arriving around the same time will unlikely provide immediate relief.