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Market for onions from storage grows weaker

Chinese onion exports in the first 7 months of 2021 declined by 21.61% compared to the same period last year

China exported around 59,700 tons of fresh onions in July. The export value was around 41.5 million USD at an average export price of 0.70 USD per kg. The export volume shrunk by 3.89% compared to the previous month, and decreased by 23.98% compared to July last year. The combined export volume in the first 7 months of 2021 reached 325,153 tons, which is 21.61% less than in the same period last year.

Export conditions have not been great of late. China mainly exports onions to Japan, Korea, and Southeast Asia, and most onion export is freighted by sea. As a result of the high shipping price and the general impact of the Covid-19 pandemic, many ports are short on empty shipping containers and distribution is difficult. This raises the cost price of export and reduces the profit margin. People in the onion market are waiting to see how developments progress, and the overall trade volume is not very big.

Gansu is one of the largest onion production areas in China. The new onion season has begun and supply is gradually growing. In recent days the delivery speed has slightly gone up, but the price of yellow onions has fallen a bit. And for onions from cold storage in Shandong and Henan the market has weakened. The speed of trade is rather low and traders with storage space are waiting to see what happens.

The price of onions in Gansu began to fall in the middle of August and has been weak ever since. Farmers are relatively eager to sell their onions, but traders with storage space are still hesitant. The market is not very active, apart from regular demand. The price of red onions from Gansu is around 0.68 yuan [0.10 USD] per 0.5 kg, while the price of yellow onions is around 0.40-0.45 yuan [0.06-0.07 USD] per 0.5 kg. Delivery speed slightly increased in the last few days. The price of red onions steadily, but slowly, rises, while the price of yellow onions remains low. Later in the season, the price is expected to fall even further when the supply volume grows.

The price of onions from cold storage is relatively stable. As the supply volume of fresh onions declines, the traders with onions in cold storage become more eager to sell their stock, but they receive competition from fresh Gansu onions. In addition, the pandemic still weakens the market. That is why the onion trade remains rather slow. The onion reserve in the refrigerated warehouses of Henan is already rather low around 20%. The asking price for top-quality onions from cold storage is quite strong and sellers do not accept low prices, but buyers do not accept high prices. Suppliers are more eager to let go of their second-rate stock, but buyers are not interested. In the short term the market is likely to remain weak, and trade slow.

How the market will change later in the season remains unclear. Farmers and traders are waiting to see what happens. Major factors in the eventual development of the Chinese onion market include the rate at which onions in storage spoil, storage capacity in Gansu, developments in the export market, and weather conditions.

Source: My iron web

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