Spices Market Update

US

The 2023 US onion harvest finished at the end of October. Overall, industry production came close to planned levels despite the extremely wet weather conditions and flooding California experienced in 2023. Planting for crop year 2024 is completed in the Imperial Valley and Central California regions. Planting in Tulelake, Oregon, and Washington will be completed by late winter. Harvest for the 2024 onion crop is expected to begin in May.

Most reservoirs in California remain close to or above historical levels for this time of the year. This will provide relief regarding water allocation to the growers in the Central Valley region. A strong El Niño pattern is forecasted over the Pacific through winter and could result in wetter-than-average conditions for most of California. Warm and dry temperatures are predicted for the Pacific Northwest and may result in drought-like conditions, although it is too early to tell. ofi mitigates the impact of weather and other crop-related issues through a diverse grower footprint expanding across California, Arizona, Washington, and Oregon, combined with redundant operations across multiple plants in the US. Growers and processors continue to manage higher labor costs and evaluate competitive crop returns for onion and garlic compared to other crops. Inflationary conditions experienced in utilities over the past year have stabilized. The 2024 outlook for natural gas is pointing to an uptick, potentially impacting CY24 processing costs and fertilizer, but it’s too early to tell.

Overall, onion inventories across most fractions and quality levels remain adequate to support demand. Prices are expected to mirror inflation for 2024. Demand is extremely strong for chopped, large chopped, and diced onion, along with toasted onion across all fractions. Prices for these items are projected to see further elevation in 2024. The cost of irradiation continues to rise and is forecasted to increase by 10 – 12% in 2024. ofi continues to invest in cost mitigation technologies to offset the rising cost of irradiation as it relates to onion.

Egypt

Yellow Onion: The Egyptian yellow onion planting area increased 30-40% compared to previous years. The high realization of the 2023 crop has been the main thrust for a higher planting rate in 2024. The weather has also been favorable, leading to the expectation of a good yield. The harvest of the winter crop started in November. The stock levels with traders are very low due to the poor planting and high exports in 2023. This meant that the new crop harvest was used to meet the local market demand. Traders and exporters hoped to export the onion once the export ban was lifted in January 2024 and hence kept the summer onions in storage. The above actions resulted in higher prices for yellow winter onions and low availability for processors.

The inflationary pressures also added to the pricing woes of processors. Consumer prices reached an all-time high, and the government had to intervene. On December 12th, the government confirmed the extension until March 2024 of the fresh onion ban. The prices are expected to decrease slightly, and availability will increase in the coming weeks. However, we do not expect a sharp decrease in prices since the harvested onion will also fill the vacuum in the local market. On the other hand, if the government continues with the ban, we expect a sharp decrease in fresh onion in the summer.

White Onion: There is a positive outlook for the white onion season. We expect to see the market to offer white onion to customers in February 2024 once there are more significant insights into yield and quality.

US

The 2023 US garlic harvest was completed by the end of October. Overall, industry production came in slightly lower than planned levels. Planting for the 2024 crop is completed. Harvest is expected to begin in June. Preliminary indications suggest the possibility of a smaller US onion and garlic crop in 2024. This cautious approach by the industry results from destocking pressure across the distribution chain lasting longer than predicted. Higher interest rates are also contributing to stricter inventory management practices. Shifting consumer food spending habits has compounded the situation; therefore, it is fundamental that suppliers are positioned to respond quickly to changing trends and consumption patterns.

Demand for US garlic, especially BI-controlled specifications and minced garlic, is strong, and inventory levels continue to tighten. Prices are expected to mirror inflation in 2024. Elevated pricing is expected for BI-controlled specifications and minced garlic. Considering the rising concern surrounding food safety and supply chain transparency, particularly from offshore supply, combined with rising geopolitical tensions, the US remains the most reliable, resilient, and trustworthy secure source of supply of high quality, fully traceable, sustainably grown and produced, dried onion and garlic across the globe.

China

In October, garlic flakes export volume was 7% lower than last year at the same time due to the high price, but the export quantity in August and September was 13% higher than last year at the same time. The EU quality new crop garlic flakes total availability is low, with total production volume being 50% lower than last year, but speculators held more than 80%. Fresh garlic prices have been stable recently. However, the cold storage quantity is expected to be slightly lower than the same time last year. The weather conditions in winter will affect garlic flake prices after the Chinese New Year.

Vietnam Spices

Pepper

Vietnam is in coffee season and will start harvesting pepper in January 2024. Brazil is facing a dry season linked with El Nino, which will negatively impact the upcoming crop by reducing its production in 2024. Until November 2023, Vietnam exports were up by 15% compared to 2022. China has been the largest market for Vietnam pepper so far. Exports to the United States and Europe were down by 16% and 3%, respectively, compared to the same period last year. Until October 2023, Brazil’s exports were down by 14% compared to 2022. Vietnam is the largest buyer of Brazil pepper, followed by the United Arab Emirates and Pakistan.

Cassia, Nutmeg, & Ginger

Cassia: The Autumn season is coming to an end. Until October 2023’, Vietnam exports were up by 22% compared to 2022. Demand came from India, which is still the most active buyer in the Vietnam market, followed by Europe (Down by 13%) and the United States (Up by 7%). Indonesia’s cassia market is slow and quiet due to less demand. 

Nutmeg: Nutmeg harvesting is currently at its peak. The rainy season has started in some main growing areas. There is a consistent demand from Chinese and Indian buyers, particularly for mace.

Ginger: There is concern related to the overall ginger crop, which has been impacted due to poor fertilizer application and pests.

Green Chiles / Jalapeño

The 2023 summer harvest closed on November 2nd. Weather conditions were not optimal in 2023, with an unseasonably cold spring, a surprise late frost through the summer, and record-high temperatures in August and September. In the face of economic uncertainty, the pepper growers in the southwest chose to be risk averse, resulting in a decision to plant fewer speculative acres than normal and adhere strictly to contracted amounts. The sentiment among growers regarding peppers is quite delicate. It has been a challenging year, marked by weather-related issues, labor shortages, and rising input costs. The quality of incoming produce was high, with a 99.4% acceptance rate. The fact that adverse economic and environmental issues persisted while our contracted growers delivered quality produce demonstrates that ofi has a strong list of growers that can perform in challenging conditions. 

Chilli

Cyclone Michaung hit the coastal parts of Andhra Pradesh and Telangana. Heavy rainfall was observed from December 4th to December 6th in these regions. It led to waterlogging in these areas. An impact assessment is happening as farmers cannot enter the field. The new crop arrivals have started in Guntur and Byadgi Mandis with high moisture. Black thrip is visible in all regions of Karnataka. Black Thrips infestation is visible in some parts of Warangal (Telangana). The leaf curl virus is visible in the Etunagaram (Telangana) region.

Coriander

CY23 area is expected to be significantly higher than last year. The crop is at the flowering stage and the weather is favorable. Yields are expected to meet demand. The Gujarat state surveys on progressive sowing show a decrease in acreage for coriander compared to last year. Madhya Pradesh and Rajasthan acreage is expected to decrease. Sowing will be completed in the fourth week of December. Domestic stock availability is expected to be good. 2023 Exports are up by 191% compared to 2022 on a YTD basis due to low prices. Domestic demand expectations are good for the rest of the year.

Turmeric

The 2023-24 crop sowing has decreased by 40% compared to 2022-23. Prices doubled in July and August of 2023. Low sowing was due to low prices. Cyclone Michaung has not affected any of the turmeric growing areas. Vegetative growth continues to be good, and there are no reports of rhizome rot or pest infestation. The North Karnataka crop is expected as early as the second week of January. Limited good-quality materials are arriving in Erode, Nizamabad, and Salem markets. Prices remain volatile. Small quantities are trading at higher prices depending on demand by limited local grinding companies.

Cumin

The Gujarat state surveys on progressive sowing show an increase in acreage for cumin compared to last year. 90% of the sowing is completed. Cumin acreage in Jaisalmer and Bikaner in Rajasthan (major IPM growing regions) is also expected to increase. Overall, stocks are low, especially for IPM cumin. Exports are down by approximately 25% compared to last year on a YTD basis.