“In my 20 years on the sales desk, this is the shortest supply of onions I have seen.” This is what John Harris of Paradigm Fresh says about the current state of onion supply. “Except for jumbo red onions, of the weekly supplies, I’d say less than 10 percent of it is open market.”
There are several factors contributing to this current state of supply, starting with Hurricane Hilary in late August which affected a number of Baja Mexico’s vegetable crops including onions. “They were either severely damaged or destroyed entirely,” says Harris.
That meant that the supply that should have been growing and ready to supply the domestic Mexican market was not available. “Mexico uses let’s say 80-90 truckloads a day of U.S. number one quality onions for grocery stores. They had to come into the domestic U.S. market to purchase onions and they are still buying to this day. It began at a fever pitch at the beginning of December and it’s continued,” Harris says.
Then, to the north, Eastern Canada had ample rains at harvest which impacted their crops, either destroying the crop or producing lesser quality onions than was hoped for. Add to that the hurricane-related rain the Treasure Valley saw at the end of August during harvest. “They got quite a bit of rain but it was the timing of it that created some quality issues and storability so their shrink has been higher than normal,” adds Harris.
Short Peruvian sweets
Then there’s Peru which also had an extremely short crop of sweet onions this year so the U.S. has been supplying domestic sweet onions in place of Peruvian sweets for the large part of the year.
So where does that leave the supply? “It’s one thing to have the white supply short but at this point it’s become, except for contract orders, almost non-existent,” says Harris, noting prices are near historic highs with nearly zero availability. “The next supply of white onions will be Mexican product.” Typically that happens around Feb. 5, though this year, cooler weather may delay that by a week.
Yellow onion supply isn’t as dire though pricing is in the upper teens. “However it’s complicated to cover demand. You can’t just go out and buy all that you need like on a typical year--you may get a load or two from one shipper and a load or two from another,” he says. “That supply has gotten low enough that they have supply, but they also have to get through their contracts through March and April.”
Medium red onions are about the same way. “It seemed like everybody had a crop of reds this year that was heavier to the jumbo size so mediums have been a little sparse all season,” Harris adds, noting pricing is $12 FOB on medium and jumbo reds. “There is okay supply on jumbo reds though and the price on reds has been pretty steady and consistent for the last four to six weeks.”
The state of demand
As for demand, Harris describes it as more of a “plead.” “It’s ‘Can you please help me or can you find anything?’ as opposed to your typical day-to-day business of asking what you’re looking for, sending a quote and determining delivered price,” he says. “I wouldn’t say price is not a factor but it’s most definitely secondary to availability. Pricing is very strong.”
Looking ahead, it’s believed there will be stress on the onion market until the end of summer. “I don’t think that we’re going to get back to regularly scheduled marketing until the season starts again in August,” he says. While typically storage supply runs until April-May when Southern California starts its onion production in the third week of April, there won’t be storage supply there and that will put a lot more pressure on that deal.”
At the same time while Canada and New York hold onions typically until the end of June, Harris says they won’t have supply either and will likely be buyers, which would put even more pressure on California and New Mexico supply. “All of these factors are just going to keep building on top of each other until we get to our growing season in August,” Harris says.
For more information:
John Harris
Paradigm Fresh
Tel: +1 (970) 775.2049
John@paradigmfresh.com
www.paradigmfresh.com