Onion f.o.b.s to reflect tight supplies for weeks

03/09/2010 05:18:16 PM
Andy Nelson

Bad winter weather in Mexico and Texas should keep onion supplies very tight well into spring, grower-shippers said.

With much of the Mexican winter crop wiped out by cold, wet weather, product that normally would be exported to the U.S. is staying in Mexico, said Don Ed Holmes, owner of Weslaco, Texas-based The Onion House.

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“The Mexican market is red-hot,” Holmes said March 9. “It’s hard to get continuity of business because there’s no continuity of market. Some days we get 20 to 40 loads out of Mexico, some days 10 to 12.”

On March 9, the U.S. Depart-ment of Agriculture reported prices of $34-36 for 50-pound sacks of jumbo and medium yellow grano onions from Mexico, up from $8-10 last year at the same time.

Barry Rogers, president of Sweet Onion Trading Co., Palm Bay, Fla., said an expected Mexican shipment in early March shrunk from 50 to 26 to 15 loads.

Mexican volumes will likely tick up in mid-March, but not enough to meet demand, Holmes said.

With the Oregon and Idaho crops wrapping up sooner than usual, thanks in large part to shippers’ exporting to Mexico to meet demand there, Texas will likely be the only game in town beginning in late March or early April, shippers said.

But the beginning of the Texas deal will by no means signal an end to high prices and low supplies, thanks to similar growing conditions there, said Michael Hively, chief financial officer and general manager of Bland Farms LLC, Glennville, Ga.

“Quite frankly, there will be about half a crop out of Texas,” Hively said. “And right now, there are as few onions as shippers have ever had. What’s in Mexico is staying in Mexico.”

The Texas fields Rogers surveyed the week of March 8 were a mixed bag, he said — some good, some bad. Growers and shippers were crossing their fingers Mother Nature didn’t have more rain in store for the region.

“It may hit the ceiling at $46, but that’s only if there’s no more bad weather,” Rogers said. “If there’s more bad weather, there’s no telling what it will do.”

Early in the Texas deal, yields would likely be in the 500-700 bag- per-acre range, down from about 1,000 per acre the last two years, Holmes said.

There’s no telling how high prices could go before the Vidalia, New Mexico, California and other domestic deals begin filling up the pipeline in May, said Johnny White, a Bland salesman.

“If whites can be $55 or $60, I think yellows can, too,” White said March 9. “There’s no question supplies will be ex-tremely tight in April.”


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