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By John Harris
Another onion update! It’s been a few weeks since I have reported. Much is the same, and a lot is changing, all at the same time. The most significant noticeable difference I see happening right now isn’t with the market at all but with the daily movement. All of January and the first half of February saw daily average shipments hovering around 450 shipments per day during the week. Starting last week, the daily shipments were and are getting weaker and weaker. Shipments are basically down about 450 loads a week from where they had been.
This isn’t terribly alarming or unusual for this time of year. In the past 7 days, we have shipped 1979 loads; last year, during this week, we shipped 2136. We also had better storage crop supplies and Mexico was humming along. Mexico has crossed 63 loads in the last 7 days as compared to 317 loads for the same 7 days last year. One more statistic to observe is that 627 loads have crossed from Mexico YTD. That’s 1123 fewer loads than had crossed last year at this time. I’m a bit of a nerd regarding these numbers, and I analyze them nearly daily. I think it’s important to look at all of the data that we have at our disposal to forecast what to expect for the coming weeks ahead. We are in uncharted waters with stocks on hand and current prices.
As far as the market goes, it has been incredibly stable on all colors and sizes for the last 2 weeks. We are topped out with prices at this point. This opinion may be unpopular or disagreed with. I encourage anyone who disagrees with me to share their thoughts and insight.
Here are my thoughts on what to expect for the next 3-5 weeks. Mexico will start crossing onions in heavier volume towards the end of this week, especially as we get into next week. The Southeast is usually where most of these onions end up early, particularly reds and yellows. As we get into March, warmer temperatures will raise sprouting concerns with storage crop onions. One exception is that whites in the Northwest are essentially finished on all open market orders. Contract commitments are still being filled, but open market orders, aside from a pallet here and there, are all that is left. With that said, Mexico will be relied upon to fill open-market white orders going forward. So far, there have been very few loads of whites available, and what is available is nearly 100% jumbo size.
As shipments increase from Mexico over the next 4 weeks and contract commitments in the Northwest finish up in March, I do expect to see some market adjustments on the horizon. I’m not suggesting that the market will tumble, but I do expect a gradual decrease in the yellow market from now through the middle to the end of April. I think for once, instead of seeing all of the progress the market has made crumble in weeks, it will be very gradual. Depending on how the domestic Mexican market holds up, it will have an impact on what crosses to the U.S. and will control the price narrative in a huge way.
It’s unlikely we’ll see more than 100-150 loads a day cross from Mexico this season on any given day until mid-April. And with the storage crop being so depleted, I just find it unlikely that this market will fall much over the next 3-5 weeks. I don’t see red prices changing a whole lot at all until April. Whites are a bit of a guess at this point, but I find it hard to imagine that whites will maintain $60+ FOB as more volume starts to show up over the next several weeks. The overall market has adapted to living on less white onions. I think it will take a little time and some market adjustment to get whites back to normal movement as they become more readily available in the coming weeks.
I will be in McAllen next week to visit with sheds and should get some valuable insight into what they are thinking for the upcoming months. As always, I do appreciate hearing from anyone who wants to chat. Email or call me anytime. I’ll update again after I get back from McAllen.
Editors Note: John Harris is the president and founder of Paradigm Fresh and Colorado Cold Connect in Fort Morgan, Colorado. He can be reached at John@paradigmfresh.com.
