Onion and Garlic Market Report- November 2019
The 2019 US onion crop harvest was completed by the end of October. Overall industry production is estimated 3-4% below planned thresholds. This change is a combined impact of delayed planting in some areas due to wet weather, unseasonal spring rains - adversely affecting yields in a number of regions along with sharp changes in temperature during the summer, impacting recoveries in several parts of California.
Planting for the 2020 crop has been completed in the desert region of Southern California and is now progressing into the Central Valley of California. Plantings in the Tule Lake region will begin in late winter – early spring 2020.
Customer demand in the US continues to remain sluggish as buyers reduce pipeline inventories. Imports have also declined relative to 2018 due to higher import duties on China and withdrawal of the General System of Preferences (GSP) beneﬁts to India.
Egypt’s CY19 summer yellow onion crop inventories are dwindling steadily. Prices however, are soft as the quality of this year’s crop has been poor, with high mold and TPC – which has kept both processors and buyers cautious about participation. Meanwhile, 2019-20 winter yellow crop planting is in progress, with most of the crop already planted. Indicators point to an 18-20% reduced crop in the coming months, driven primarily by farmers shift to potato, sugarcane and cucumber, which are offering signiﬁcantly better returns than onion, combined with weak farmer sentiment due to the low prices received by them earlier this summer.
Olam Egypt’s 2019 White onion harvest was completed by mid-July. Like last year – this year’s crop quality has been very good, with over 70% of the raw material meeting low micro / extra-low-micro standards. This year’s crop also included the ﬁrst season of fully traceable AtSource compliant, Organic certiﬁed production grown over 125 acres. The 2019 crop has now been fully processed and has seen a signiﬁcant increase in acceptance with new customers on account of its unique taste, ﬂavor, color, traceability and consistent extra low and low micro proﬁles. Contracting with growers for 2020 crop is ~55% complete and is expected to be similar in size to the current season.
Indian dried onion markets have seen a sharp increase in market pricing both in origin as well as in destination over the last two months. This increase is the collective result of the depletion of the excess inventory from the 2017 and 2018 bumper crops and a 30-40% reduction in CY19 crop production to correct the demand-supply imbalance. Informal reports by Indian exporters put origin inventories between 7-10k MT as at end Oct 2019. With EU spot inventories estimated at only 1-1.5 months cover - and delayed planting of the 2020 spring onion crop due to unseasonal rains, it was natural for prices to ramp up sharply.
Chinese prices have remained in sync with India, but landed costs into USA have increased sharply due to the 25% increase in import duties earlier this year.
During September and October 2019, Chinese ﬂake prices remained weak in origin, moving down largely by sluggish demand in the US market and excess availability of destination inventory in USA brought in ahead of duty increases earlier in the year. Cumulative ﬂake availability in origin at end October is estimated at ~450k MT (equivalent to ~2 years’ worth of exports) and is adequate to take care of normal dried garlic export demand through next year’s crop. Meanwhile, garlic planting for the 2020 crop is in progress and will be ﬁnished at the end of November.
As a trustworthy supplier, Olam remains committed to food safety and quality. Moving into 2020, our Gilroy, CA. plant will undergo upgrades in packaging and metal detection capabilities. As we re-imagine Global Agriculture, Olam continues to drive transformation in the supply chain through our comprehensive sustainable sourcing program, known as AtSource. This program, combined with our ongoing quality guarantees for non-GMO, gluten-free and peanut allergen non-detected ingredients, meets the highest quality standards required by our customers.