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Plentiful spring onion supply from Mexico keeps market soft
There is an ongoing abundance of spring onion supplies in the US market. A continued increase in acreage in Mexico is seen as the reason behind the plentiful supply. Producers have noted that almost all production is now centered in various parts of Mexico.
"The majority of spring onion production is almost all coming from Mexico now, as it is much cheaper to do so," said Raul Plascencia of Sunsation Farms. "It's become rather cost-prohibitive to grow it in the United States, because it's so labor intensive. Production from Mexico seems to be increasing each year as areas are expanding, resulting in normal to heavy supplies."
Because there is such an excess of spring onions, the market has remained soft for the most part. The demand is not there to absorb all the product and growers only see prices climb during Holiday periods.
"The open market is pretty cheap and has remained so for quite some time now," Plascencia noted. "The last few times we have seen prices go up is around Holidays such as Christmas and Easter. This is not due to an increase in demand or because of weather events, but rather labor shortages and interruptions at border crossings, owing to the Holidays. Consequently, supplies tighten up for a few days and prices go up. Such market behavior is an indication that there is a lot of product around.
Prices likely to remain low
There is no change expected in the foreseeable future. Producers have observed that Mexican production keeps increasing every year. And it's not just an increase in volume - growing practices are also improving. Plascencia said that contracts are one of the only ways growers can ensure stable returns.
"The contract business is steady and there is plenty of product to cover it," he said. "We don't see the market changing in the near future as Mexico keeps seeing an increase in acreage and more players coming into the market. The iceless market, in particular, is growing strongly. Mexico is constantly improving their growing practices and food safety standards, which is further encouraging more production to move there and away from the United States."
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