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Onion market heats up on short storage supplies

As the spring onion crops from California, Texas and Vidalia get going over the next several weeks, they should be greeted by a strong market, which some believe could be very hot while others are tempering their enthusiasm.

Tracy Fowler, general manager of L&M Cos. Inc., which is headquartered in Raleigh, NC, but has onion operations in multiple states, said that storage supplies out of the Northwest are as low as they have been in many years and that could mean a very strong market moving forward.

"We are looking at one of the shortest markets for storage crop onions we have seen in several years," he told The Produce News March 26. "The storage market in Idaho, Oregon and Washington is below the levels from four seasons ago when we hit record f.o.b. prices in Texas and California."

In fact, he said that there are 10 million pounds fewer than there were four years ago when the market price for a sack of onions famously soared above a $50 bill for a short period.

"This market is shaping up to be a short again," Mr. Fowler said.

Don Ed Holmes of The Onion House LLC in Weslaco, TX, said that "it should be a darn good year but not a crazy one like 2010."

In fact, he believes 2013 is shaping up for Texas to be more like 2007. "That year supplies from Mexico were short and we had a good market all season."

Though Mr. Holmes didn't forecast a "crazy market," he did tell The Produce News March 27 that it does appear that total onion supplies will be down, so a hot market is possible. He said that Mexico's sweet onion crop is down as are both growing regions in Texas -- the Rio Grande Valley and the Uvalde district.

"And Vidalia got an awful lot of rain, so their crop could be smaller also," he said. "And I've heard that Southern California is down."

Mr. Holmes added that that the market so far this year has been strong with very good demand. "Our customers, especially the foodservice guys, are putting in bigger orders. The market is higher and movement is better, which usually isn't the case."

Though Mr. Fowler was reluctant to say it, he sees a very strong market on the horizon. In late March, he said red onions in 50-pound units had reached more than $40, while white onions were in the $25 range and yellow onions were being quoted from $12 to $14.

"We should see these type markets continue into the April and May shipping of Texas and California onions," Mr. Fowler said.

He added that the onion situation did appear to be lining up as it did in 2010. "I am not going to say that we are definitely going to have a $40 market [for whites and yellows], but it sure does look that way. It looks very promising."

Mr. Fowler added that growers could use a strong market after selling most of their crop in single digits last year.

"We need this after having $5-$6 f.o.b.s for much of last year," he said. "Most people will be happy if we are just in double digits all year."

Mr. Holmes agreed that double-digit markets appear likely in the coming month or so. "I think we will see some markets in the upper teens or low-$20s with whites a bit higher," he said.

Mr. Fowler reiterated that the storage crop numbers are a huge factor in determining spring onions prices. In fact, he said, "The storage crop shortage is the single largest factor in the increasing markets."

Mr. Holmes was looking at some different numbers and said that nationally, storage numbers are higher than they were in 2010.

Wendy Brannen, executive director of the Vidalia Onion Committee in Vidalia, GA, wouldn't weigh in on the market price discussion but she did say that growers in her region were expecting a good year.

However, Ms. Brannen said it does not appear that there was any major damage from the recent rains.

"It's been colder and wetter which has retarded our growth, but we don't see any damage," she said.

She said that instead of a mid-April start to the season, most Vidalia shippers were expecting to produce their first shipments in the latter part of the month.

Vidalia typically ships fresh until early June, and then continues shipments out of storage into late August or early September.

Ms. Brannen said that this year's acreage for Vidalia onions has officially been set at 12,559, which is a relatively insignificant 1 percent less than 2012.