US Onion

The 2018 US onion crop harvest was completed in November. Industry yields ranged 5-7% higher than planned volumes, a welcome development after 3 consecutive years of short crops. The improved yields are a result of better soil conditions caused by heavy rains in 2017, 100% water allocations for the 2018 crop, and largely favorable weather conditions throughout the season. Meanwhile, planting for the 2019 crop has been completed in the desert region of Southern California. Plantings in Blythe, Kern, and early Westside are still in progress.

Egypt & India Onion

The 2018-19 yellow onion winter crop harvest is in progress, with most of the crop already harvested. Indicators point to a 12-15% reduction in the overall crop compared to the last year. This is driven primarily by weak farmer sentiment from the low prices they received earlier this summer and sluggish customer demand from both the dehydrated and fresh onion markets.

Olam Egypt’s 2018 white onion inventories are depleting fast, and the crop will be fully sold in the next few weeks. Contracting with growers for 2019 crop is in progress, and is expected to be slightly lower than last year. This is due to increased grower costs and higher transport costs from the Egyptian government’s subsidy withdrawals. India dried onion markets continue to roil through a surplus in supply caused by large 2017 & 2018 fresh onion crops. The continued oversupply and weakness in onion prices has resulted in the closure and declared bankruptcy of many units and deterioration of material quality.

Future Outlook

USA

Despite the improved crop yields, there is a limited surplus of extra-low and low micro availability. Availability could diminish at short notice if there is a demand surge. Early coverage recommended.

CY2018 production is happening in a cost-push inflationary environment. Increased raw material, transportation, utilities and wage cost inflation, coupled with higher inventory carrying costs and cap and trade costs have more than set all gains from the improved yields and will cause US processors to adjust market responses to correct for the cost increases.

US onion processors are adopting a more cautious approach in the next season. Preliminary estimates suggest a reduction in the 2019 crop compared to the current year. A clearer picture should emerge by Q1 2019.

Egypt & India

Reduced exports of fresh onion from Europe could create a surge in fresh onion export demand from Egypt.

Egyptian white onion availability is expected to remain stable for the short to medium term.

CY2018-19 India onion crop is projected to decrease by 40-45%.

The number of active players in India is estimated to have dropped from over 150 units in 2017, by almost 50%.

US Garlic

The 2018 US garlic crop harvest was completed in October. Raw material has been field harvested but is likely to be in storage for the next few weeks while it cures and is processed. This is expected to be completed by end of November or early December. Raw garlic yields are estimated to be 10-15% higher than planned levels. Similar to onion, this is a welcome development after 3 consecutive years of short crops, and buyers and processors will continue to manage through higher transportation costs into next year. Planting for the 2019 season has been completed.

Chinese Garlic

During September and October 2018, Chinese flake prices remained flat to weak in origin, moving down largely to accommodate duty increases for imports into the US market. Meanwhile, garlic planting for the 2018 crop is in progress and will be finished at the end of November. Preliminary estimates of the 2019 crop put acreage down by 30-35% over 2018.

Future Outlook

USA

Low and extra low micro availability has improved and will be adequate for normal demand.

Organic US origin product is also available in decent quantities.

Like US onion, US garlic is impacted by cost-push inflation factors. Preliminary CY2019 garlic planting estimates are down compared to the current year. A clearer picture will emerge by Q2 2019, but medium to long term coverage is strongly recommended while prices are stable.

CHINA

Origin exporters are expected to aggressively cover and ship out cargo to USA to beat the year end cut off for higher duty rates in the USA.

Most US customers are well covered through mid-2019 and fresh demand is likely to taper off by year end. European and other markets may continue to come in periodically to cover.

The weather from November to May needs to be watched carefully as it will have a critical influence on the price scenario of next year’s crop.