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India Experiences Firm Pricing For Onion In 2021, So Does USA & Egypt

by | Nov 22, 2021 | Onions, Spices

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India is experiencing firm to steady pricing for onion due to the reduced availability of the product in the market. According to the traders, the price for the crop is doing well, both at the origin and destination.

The improvement in the price was primarily witnessed during the last quarter of the 2021 market year. This development has led to farmers considering increasing the sowing acreage of the crop for 2022.

However, despite having improved pricing for the crop, the US and Egypt have reduced their production acreage for 2022.

 Market Sentiment 

India 

It has been reported the improvement of the price in the onion market might change the sowing landscape for the crop. Furthermore, with the same export figures for 2021 that were of 2020 and the increase in the export demand, farmers look for options to increase crop production.

Price:  The current rate of onion in the market is $0.54 per kg FOB.

China 

The market sentiment for dry onion in China is similar to that of India, good demand and the depleting inventory. As a result, the price for the spice is kept firm in the country. Also, the Chinese dried onion price will be determined by the product’s pricing in India and is expected to be range-bound at least until the Chinese New Year.

USA

Despite being an onion-producing country, the USA continues to be one of the major importers of the product. Currently, the country’s crop production is 12 to 18 percent below the expected threshold yield for 2021.

Several factors like reduced water supply, drought, and higher growing prices by 40 to 50 percent in Tule Lake reduced the production. In San Joaquin Valley, California, the production was impacted negatively due to the widespread Fusarium-based rot that decayed the onions in the field. Finally, the yield was reduced in Oregon due to poor water management, limited water supply, and excessively strong wind.

This shortage of yield has resulted in the market price for onion going up by 30 to 35 percent compared to last year. Also, due to the shortage, the availability of XLB and chopped are tight across all fractions.

As a result, the overall yield for the 2021 harvest is less, and it is expected the overall plantation of the crop for 2022 will reduce in acreage. It remains to be seen whether the US can meet its core demand for the product or increase its import. A better understanding of the situation is likely to happen towards the end of the first quarter of 2022.

Egypt

The situation is no different in Egypt than in the USA. The winter crop and yellow onion production are down by 20 to 25 percent than last year. However, the production cost of the crop has soared by 40 percent due to the increase in labor costs. As a result, the prices are likely to increase for yellow onion in Egypt.

For the white onion, the situation for summer 2022 is a bit different as the sowing acreage is expected to be as same as the current year. The sowing of the crop will complete this month, November 2021, and the harvesting is expected to start towards April 2022 end. A better understanding of the situation can be reported after the sowing completes.

Prediction 

India

While it is too early to predict whether there will be an increase in crop production for 2022, the yield is expected to be normal for India. It is also believed that the prices for dried onion will spike for the first quarter of 2022 as the inventory continues to deplete. However, the situation of how the prices will fare for 2022 will be clearer around early 2022 based on the production of the winter onion crop of 2022.

China

It has also been reported that India’s production of onion and manufacturing of dried onion will also affect the Chinese market price for the product, despite the latter being predicted to have a larger crop yield for 2021-2022.

USA

The market for onion in the US is likely to stay firm, too, amidst lowering of the yield as predicted for 2022. Therefore, it has also been expected that dried onion prices will keep strengthening and will reach higher levels towards the harvest of 2022. Furthermore, the prices will be supported by the ongoing labor shortage, increase in freight costs, and lesser availability of truckers on the domestic front.

Egypt

With labor limitations and low yield like the US, Egypt’s price for yellow onion will stay firm. Also, like the rest of the international onion market, the product prices will go higher for Egypt too for the calendar year 2022.

It now remains to be seen how India and the rest of the onion market fares in the calendar year 2022 with expected less yield from most countries.

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