November 9 2005, 11:24 Agrarian Marketing Project

Good onion quality may result in unfavorable prices

Market players observe positive onion price dynamics; they tend to increase stored volumes on purpose to have better prices on onion later. Still the specialists can't say for sure whether these expectations can be justified. Past year farms were able to get 30-40%, and sometimes 100% higher prices for stored onion comparing to sales done right after harvesting. However, according to the Agricultural Marketing Project assessments, harvest 2004 was 5% less than in 2005, and the prices in peak season (September-November 2004) were 20-40% lower than in 2005. No rapid demand growth has been observed; taking this fact into consideration, we can assume that stored onion volumes are significantly greater than a year ago. Farmers say that onion quality is much better this year, so that storage losses will be fewer correspondently. Past year high humidity was recorded in stored onion, and large volumes have been spoiled and sold before planned time. This year the product is expected to be stored well until the future harvest. Thus, excessive onion volumes may be accumulated in storages, and the prices will not be so favorable as the vendors hope for.

Hardly estimated onion volumes for export bring some element of uncertainty in market situation. In the previous years, as market players tell, large volumes of cheap onion used to be imported from Poland, when onion price became too high. Naturally, the major part of imported onion was contraband, as import tax is EUR 0.2/kg.

We'll remind that at this moment onion costs USD 0.3/kg on wholesale markets, and USD 0.25-0.29/kg on farms.