Onion market drops a bit but remains hot
Onion market drops a bit but remains hot
The Federal-State Market News Service reported in mid-April that 50-pound sacks of yellow onions had an f.o.b. price near $30, while a limited supply of white onions was still topping $50 per 50-pound sack. These prices are not much different than they were six weeks ago and even before that.
While the dollar figures themselves are remarkable, what makes this such a compelling story is that the market has remained at this unusually high level for such a long period of time.
"We had prices like this in 2003, but they only lasted a week. We've had this market all season," said Don Ed Holmes of The Onion House in Weslaco, TX, speaking specifically of the Texas spring onion deal.
And while he expected the market to drop as much as $10 during the last two weeks of April, he predicted a return to the $30 market in early May, and quite possibly to hold that market for the rest of the month. "In fact, I don't think we are going to see a whole lot of relief until Idaho starts in September."
As a gauge of how good the onion market has been, one need only talk to a salesman for a few minutes.
"Last year about this time, right after tax day (April 15), we were getting $3.50 to $4 (for a 50-pound sack of yellow onions) and were just hoping the market would climb back to $5. We were thinking we would be doing really well if it did. This year we're complaining because we might drop into the teens," Mr. Holmes said with more than a chuckle.
"I have never seen [an onion market] this hot," said Amy Gates, chief operating officer of Frontera Produce Ltd. in Edinburg, TX, who admitted that her history doesn't go back that far. "And the people that have been here a lot longer than I have also can't ever remember a market like this."
Ms. Gates said that onions typically do not create a lot of buzz, but everyone is talking about the product and will probably continue to do so at least through the summer.
Mr. Holmes said that late volume from Mexico as well as more volume than expected from Washington state are producing a surge in supplies and a corresponding drop in the f.o.b. price as April wanes. But he said that by early May, Mexico and Washington will be done and so will most of the shipments from the Rio Grande Valley.
"[Texas] will then be moving up to the Winter Garden area [toward San Antonio] for the rest of May, and Winter Garden only planted 50 percent of what they did last year. May should see a hot market again," said Mr. Holmes. After that, smaller deals in other areas including west Texas and New Mexico will get underway, but volume is not expected to meet demand.
Lack of supplies in both Texas and Mexico is the reason an already-good market stayed hot when spring began. Mr. Holmes said that final planting reports from the Rio Grande Valley revealed that 32 percent less acreage was planted for the 2007 season than was in the ground in 2006.
He said that weather and disease problems knocked yields down another 10 percent. This occurred as Mexico was also producing significantly fewer onions than a year earlier because of heavy rains during both the planting and harvesting seasons.
And other producing areas -- most notably the Northwest -- also had less production than normal, which reduced the size of the winter storage crop. No respite from the demand-exceeds-supply situation is expected from the Southeast, which is also experiencing a year lighter in volume than last year.
Onion harvesting in the Vidalia, GA, area began April 10 with the first shipments coming a few days later.
Wendy Brannen, executive director of the Vidalia Onion Committee, said that grower-shippers in that region are anticipating a very strong marketing situation throughout their season.
While she would not predict volume, she said it would not reach the size of last year's crop, which had record yields.
"The yields this year are looking much more like a normal year," she said April 16, with the season only a few days old.
Over the next few weeks, Vidalia onion volume is expected to grow until it reaches its peak shipping months of May and June. Ms. Brannen said that fresh shipments would continue through mid-July, with storage onions supplies available probably until Labor Day.
"We are expecting very good prices for the whole season and our growers are very happy about that," she quipped.
While the dollar figures themselves are remarkable, what makes this such a compelling story is that the market has remained at this unusually high level for such a long period of time.
"We had prices like this in 2003, but they only lasted a week. We've had this market all season," said Don Ed Holmes of The Onion House in Weslaco, TX, speaking specifically of the Texas spring onion deal.
And while he expected the market to drop as much as $10 during the last two weeks of April, he predicted a return to the $30 market in early May, and quite possibly to hold that market for the rest of the month. "In fact, I don't think we are going to see a whole lot of relief until Idaho starts in September."
As a gauge of how good the onion market has been, one need only talk to a salesman for a few minutes.
"Last year about this time, right after tax day (April 15), we were getting $3.50 to $4 (for a 50-pound sack of yellow onions) and were just hoping the market would climb back to $5. We were thinking we would be doing really well if it did. This year we're complaining because we might drop into the teens," Mr. Holmes said with more than a chuckle.
"I have never seen [an onion market] this hot," said Amy Gates, chief operating officer of Frontera Produce Ltd. in Edinburg, TX, who admitted that her history doesn't go back that far. "And the people that have been here a lot longer than I have also can't ever remember a market like this."
Ms. Gates said that onions typically do not create a lot of buzz, but everyone is talking about the product and will probably continue to do so at least through the summer.
Mr. Holmes said that late volume from Mexico as well as more volume than expected from Washington state are producing a surge in supplies and a corresponding drop in the f.o.b. price as April wanes. But he said that by early May, Mexico and Washington will be done and so will most of the shipments from the Rio Grande Valley.
"[Texas] will then be moving up to the Winter Garden area [toward San Antonio] for the rest of May, and Winter Garden only planted 50 percent of what they did last year. May should see a hot market again," said Mr. Holmes. After that, smaller deals in other areas including west Texas and New Mexico will get underway, but volume is not expected to meet demand.
Lack of supplies in both Texas and Mexico is the reason an already-good market stayed hot when spring began. Mr. Holmes said that final planting reports from the Rio Grande Valley revealed that 32 percent less acreage was planted for the 2007 season than was in the ground in 2006.
He said that weather and disease problems knocked yields down another 10 percent. This occurred as Mexico was also producing significantly fewer onions than a year earlier because of heavy rains during both the planting and harvesting seasons.
And other producing areas -- most notably the Northwest -- also had less production than normal, which reduced the size of the winter storage crop. No respite from the demand-exceeds-supply situation is expected from the Southeast, which is also experiencing a year lighter in volume than last year.
Onion harvesting in the Vidalia, GA, area began April 10 with the first shipments coming a few days later.
Wendy Brannen, executive director of the Vidalia Onion Committee, said that grower-shippers in that region are anticipating a very strong marketing situation throughout their season.
While she would not predict volume, she said it would not reach the size of last year's crop, which had record yields.
"The yields this year are looking much more like a normal year," she said April 16, with the season only a few days old.
Over the next few weeks, Vidalia onion volume is expected to grow until it reaches its peak shipping months of May and June. Ms. Brannen said that fresh shipments would continue through mid-July, with storage onions supplies available probably until Labor Day.
"We are expecting very good prices for the whole season and our growers are very happy about that," she quipped.
