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Onion Market Update Feb. 7, 2023
By John Harris
We have officially entered into an unexpected market in my opinion. Storage numbers are far below that of anything considered average or normal. The 4th quarter of 2022 had historically high markets, particularly on yellows to start the 2022/2023 storage crop season off. With the high markets, we also have the highest production costs in history as well, offsetting what otherwise could have been a very profitable fall for the growers.
Fast forward to the 2nd week of February already, and we are smack-dab in the middle of a falling and depressed market and dealing with more daily supplies than demand can swallow. The problem isn’t particularly hard to diagnose. It is mid-February and every storage in the country still has onions. Every shed has labor that expects to earn a certain number of paid hours a week or they’ll leave, meaning every shed is being forced to run probably a little more volume than is necessary for the current demand. Add in the fact that Mexico is sending 200 loads per week and we have taken a short market and over supplied it currently. This doesn’t mean that it is a long term problem, but it is certainly a problem right now. Sometime in March or April, the deck is going to flip, but it doesn’t appear that is going to happen anytime in the immediate future. When the deck does flip, we might be in for a fairly volatile market for the remainder of the summer until we get back to August and storage crop onions.
Yellows – The market has lost a lot of steam. Mediums have remained mostly stable as that market has been pretty low for several months. Jumbo and larger sizes fell several dollars since the first of the year. As more pressure and volume come on from Mexico, this market could continue to deteriorate modestly if demand doesn’t pick up just a bit.
Whites – This market has probably seen the largest impact in the last 10 weeks as it has been a long, slow slide-down. Quality in the Northwest has been a little spotty. Greening has been a concern with Mexican product. There is ample supply of both mediums and jumbos. There isn’t enough outlets for the supply of mediums that seem to exist at the moment. Add that all together, and here we are with a depressed market. With all of that said, Nevada whites have held a very high quality this year and have earned a premium price compared to the rest of the market for those out there that have chosen to go that route.
Reds – This market is also depressed, but it hasn’t fallen quite as hard as yellows and whites. Partially because it has not been terribly high all year and had less room to move to nestle in close to the bottom of the market. I had been predicting an uptick in the red market all year, and it will probably happen, but not until late-March or April. I swung and missed, as I really thought that market would find some room to go up by the end of February. I guess my crystal ball led me astray this time.
Have a great week. I’ll be back to weigh in again in a couple weeks. Any comments are always welcomed. Thanks for reading.
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.
