The onion harvest in Shandong and Henan is coming to an end in the middle of June. The harvest is expected to finish before the end of the month. This season the overall surface area of red onion plantation expanded, but the overall surface area of yellow onions declined. One exporter from Shandong recently talked about conditions in onion production areas and the export market.
"The domestic market for onions is flooded as supply from various production areas enters at the same time. The size and quality of onions is diverse. The market is lively. The current purchase price for 8cm onions is around 0.75-0.80 yuan [0.11-0.12 USD] per 0.5 kg, while the purchase price of red onions is 0.35-0.40 yuan [0.05-0.06 USD] per 0.5 kg."
Although the purchase price of onions is rather low this year, but traders with storage space are waiting to see if the conditions improve. "There are several reasons for this situation, first the profits were rather meagre last year and some traders made financial loss. New traders are unable to take risks, and old hands are switching to other products. Although the purchase price is rather low, so traders can stock their warehouses at low costs, they are still not eager. Second, the harvests in various production areas were abundant this year. In addition, the overall surface area devoted to red onion plantation in Gansu, the largest onion production area in China, expanded this season. Market supply is excessive, which further dampens the eagerness of traders with storage space."
"The harvest in Gansu is expected to finish in late June. These onions will create significant competition for the sales of onions from cold storage. In addition, the overall surface area of yellow onion plantation, which is the main onion variety for the export market, slightly declined. Although some traders are optimistic about the market conditions of yellow onions, the high shipping fees create a serious obstacle for onion export, and that makes traders reluctant to buy," explained the onion exporter.
The current FOB price of peeled onions from Qingdao is around 650 USD per ton, which is much lower than a few months ago. "The low price of onions improves their competitive market position, and since the onion export has been on hold for about a year, we have had quite a few inquiries from overseas clients in the last few weeks," said the onion exporter.
"The product value of yellow onions is rather low and shipping fees have been rising since last year, so large number of onion exporters stopped exporting onions. "We still shipped a small volume of peeled onions to England and other European markets, but that also stopped because the shipping fees simply became too high," said the onion exporter. "The current shipping fee from Qingdao to Europe is 8,500-9,000 per container. Although the shipping fees are coming down, the product value of onions is quite low, and the shipping fees have not come down enough for profitable export."