The onion storage work in various places has been completed gradually, and it is expected to be completed in a week. The mentality of the storage companies is different. At present, some storage companies still take a wait-and-see attitude towards the market this year, mainly due to the following factors:
(1) Area expansion of red and purple onion in Gansu weakens the enthusiasm for storage
The area expansion of red and purple onion in Gansu further weakened the enthusiasm for companies to store. Because yellow onions are mainly used for export, red and purple onions are mainly sent to the domestic market, and domestic cold-stored onion is also mainly red and purple. Gansu, as the leading onion producing area in China, will have a certain impact on the cold-stored onions when the fresh onions are coming into the market. Although the cost of storage this year is lower than last year, the increase in the area of red and purple onions in Gansu still discourages some companies.
(2) Companies that stored the onions suffered serious losses in 2021, and they will be more cautious this year
In 2021, due to the high storage cost, the price failed to meet expectations, and most companies that stored the onions suffered serious losses. Some experienced ones gave up storing onions this year and turned to investing in other products. But considering the low cost of warehousing, low price means low risk, and some newbies also enter the market. Due to many uncertain factors, this year's earnings of companies that have stored onions need to pay attention to the market outlook.
(3) The price of yellow onions is greatly affected by exports, and the export market is still unstable
Since 2021, the onion export market has been sluggish and the export volume has been unstable. The total export of fresh or refrigerated onions in 2021 was 645,600 tons, which is significantly lower than the average level in recent years. The export situation from January to April this year is also not optimistic. The export market can directly affect the price of domestic yellow onions, and the prices of domestic red and yellow onions are mutually restrained. Due to the reduction in the area of yellow onions this year, some companies that chose to store onions believe that the profit margin of yellow onions in the later period is relatively large, but the export market is still unstable, and most companies are relatively cautious.
It is expected that the price of onion producing areas will continue to be high in the short term. Fresh onions in Baiyin producing area of Gansu are expected to start harvest in late June. Before that, there is still some room for the price increase of onions in Shandong, Henan, Jiangsu and other places.
Source: m.mysteel.com