From FreshPlaza:
OVERVIEW GLOBAL ONION MARKET
Will the 2018/2019 season be the most exciting onion campaign in years? Worldwide, the weather has had a major impact on the harvests. Not only Europe was plagued by heat, the mercury also rose high in California. Other parts of the US recorded a lot of rain, and the news coming from Asia were also not all good. That has resulted in tensions and speculation. Are there enough large sizes available? Is it advisable to sell now at a good price or gamble at the possibility of higher prices later in the season? Is the quality sufficient to keep the product in storage for all these months? So many questions, so many answers. We made an overview of the onion market.
The Netherlands: More than 30% fewer onions; shortage of large sizes
This year's sales figures are again unusual. With over 30 percent less yield, or about 40 tons per hectare, instead of the usual 60 tons, there are considerably fewer onions available for export. There are sufficient small and medium-sized onions available; however, the supply of large sizes is considerably smaller, and supers are also very rare. In the first half of the season, when good volumes of small and medium-sized onions are sold to West Africa in particular, exports won't be largely affected. However, after February, when the destination markets prefer larger sizes, the supply will likely be scarce, and there won't be enough smaller sizes available to compensate for this. The high price levels should naturally have a negative impact on the demand, but the fact that there will be more than 30 percent fewer onions in the Netherlands and more than 1 million tons less in Europe will have repercussions on the market. Some sorting companies wonder if there will be enough work for the second half of the season, as the weekly volume will barely reach 15,000 tons, while the sorting capacity exceeds 40,000 tons per week.
Spain has enough large sizes
The onion harvest is in full swing in the Iberian Peninsula, especially in the regions Castile-La Mancha, Valencia and Murcia. Even though most of the production has yet to be harvested, a smaller yield is expected compared to last year. This is mainly due to the frequent storms occasionally accompanied by hail.
"The heavy rains in early September slowed the harvest down, but the quality is generally good," says a trader. This is especially true for onions that were not affected by hail. Spain could benefit from the shortage of large sizes in Europe this year, especially in the Netherlands. "In general, Spanish onions have a good size," says a grower. Provinces like Ciudad Real, in Castile-La Mancha (the most important cultivation area in Spain) certainly expect a good availability of large sizes. "We see the demand for large onions rising every day." At the moment, the price at origin oscillates between 0.18 and 0.20 Euro per kilo, although the market price is 0.28 Euro. As a result, the margins for traders are small. "At the moment, the price is on the low side, but it will rise by mid-October."
Germany: High prices compensate for losses
At the moment, onion prices are almost twice as high as those recorded last year. A trader explains that "some of the growers have suffered losses of up to 40%, depending on the region and the production. However, the high and stable price compensates for those losses. "Normally, there is a great pressure on prices in this period. "Buyers normally want to push prices down as much as possible, but there is currently a certain unity among growers, traders and buyers, which is resulting in unusual market stability."
The quality of the onions varies, so a lot has to be done in terms of sorting. "We have to make a great effort in order to deliver quality onions to our customers," says a trader. "At times, we are hardly able to meet the demand." The high demand suggests loyalty on the part of the consumers. Growers are satisfied with the price. Sales are developing well, which is a good thing, as the shelf life of onions in storage is not guaranteed to be long. "Normally, there is a peak in the demand just before Christmas, but it is a gamble to store the onions, instead of selling them for a good price." The situation will not change much in the future. In recent years, the market was not as exciting, so no major investments or acreage expansions are expected.
France has a small production
A trader fears that the onion market will suffer from the dry weather of recent months. "Just like in the whole of northern Europe, the volumes available in France are well below the average. Because of this, the market will be turned upside down. We have to wait and see what the exact consequences will be."
The dry weather is not the only factor that has caused a reduction in French volumes. Earlier this year, large areas in the country were hit by heavy rainfall. In the Cévennes, a known production area for sweet onions, 25% to 30% of the harvest was lost. The price increase that followed this was not enough to cover the losses....MUCH MOREOur interest, despite a current desire for a nice Tortilla de patata or maybe a frittata is actually legal and regulatory: "7 U.S. Code § 13–1 - Violations, prohibition against dealings in motion picture box office receipts or onion futures; punishment"
As the all-knowing-one—Wikipedia tells it:
In 1955, two onion traders, Sam Siegel and Vincent Kosuga, cornered the onion futures market on the Chicago Mercantile Exchange...Here's the CFTC report, decision, and order, June 3, 1960.
....In the fall of 1955, Siegel and Kosuga bought enough onions and onion futures so that they controlled 98 percent of the available onions in Chicago.[4] Millions of pounds (thousands of tonnes) of onions were shipped to Chicago to cover their purchases. By late 1955, they had stored 30,000,000 pounds (14,000,000 kg) of onions in Chicago.[5] They soon changed course and convinced onion growers to begin purchasing their inventory by threatening to flood the market with onions if they did not.[5] Seigel and Kosuga told the growers that they would hold the rest of their inventory in order to support the price of onions.[6]
As the growers began buying onions, Siegel and Kosuga purchased short positions on a large amount of onion contracts.[5] They also arranged to have their stores of onions reconditioned because they had started to spoil. They shipped them outside of Chicago to have them cleaned and then repackaged and re-shipped back to Chicago. The new shipments of onions caused many futures traders to think that there was an excess of onions and further drove down onion prices in Chicago. By the end of the onion season in March 1956, Siegel and Kosuga had flooded the markets with their onions and driven the price of 50 pounds (23 kg) of onions down to 10 cents a bag.[5] In August 1955, the same quantity of onions had been priced at $2.75 a bag.[6] So many onions were shipped to Chicago in order to depress prices that there were onion shortages in other parts of the United States.[7]
Siegel and Kosuga made millions of dollars on the transaction due to their short position on onion futures.[4] At one point, however, 50 pounds (23 kg) of onions were selling in Chicago for less than the bags that held them. This drove many onion farmers into bankruptcy.[4] A public outcry ensued among onion farmers who were left with large amounts of worthless inventory.[8] Many of the farmers had to pay to dispose of the large amounts of onions that they had purchased and grown....MORE
The Spanish omlette idea was probably triggered by a memory of 2009's "Mix Butter, Onions, Cheese and Eggs. Add Electricity...".
Have I missed anything? Perhaps without the prospect of onion futures to trade it's time once again to look at Chinese garlic derivatives and pray for snow.
Inventories Rise as China’s Garlic Harvest Season EndsHmmm, maybe not. Maybe next year.
China’s 2018 garlic harvest season wrapped up at the end of August. Garlic production reached an estimated 10 million tons by the end the season with new garlic inventory of about 4 million tons—a record high that surpassesthe excessive storage volumes attained in 2008. With increased production, high inventory levels and poor sales, dried sliced garlic has become a new outlet.
If interested (and who wouldn't be?) see:
The Timeless Allure of Egg Futures: "Former teenage soldier hatches millions from Chinese egg futures"
What came first Egg or Chicken? Solution Through Granger Causality
