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Freefall of onion prices in Ukraine continue – will Ukraine start exporting onions again?

Onion prices in Ukraine have reached shocking heights in the first half of 2023, reaching US $1.3-1.4 at the wholesale level, which was an all-time record. This has motivated farmers to invest into production, despite continued occupation of the traditional growing regions of Ukraine by Russian invaders. EastFruit warned about the possible consequences in our article “Onion bubble – what will farmers do with all these onions from August onwards?”.

Now, onion prices are going down for the third month in a row in Ukraine. Current week also began with the strengthening of the previously established negative price trends, and today the wholesale prices for onions have dropped to the level of UAH 7-12/kg ($0.19-0.32/kg). Last week the price range for one of the most important vegetables in Ukraine was at the level of UAH 8-15/kg ($0.21-0.40/kg).

Market participants explain such a rapid decline in onion prices in Ukraine by a significant increase in the market supply, since the harvesting campaign in all regions of the country is in an active phase. If the current price trends continue in the domestic market of Ukraine in the next 2-3 weeks, wholesale prices for onions this season may fall below the average for the last 5 years.

According to growers, many of them have not yet harvested the main volumes of onions from the fields, which may mean that the supply of products on the market will continue to increase for at least the next 2-3 weeks, or even a month. Also, farmers note that the weather conditions in Ukraine at the moment contribute to successful harvesting, which, in their opinion, will not lead to significant losses of products during storage.

According to EastFruit analysts, commercial producers, and “newcomers” in different regions of the country have significantly expanded the area under onions this season, which can directly support the negative price trends in the future. However, we should take into consideration the fact that many of these farms may lack infrastructure and experience in onion storage and post-harvest handling, which could cause unnecessary losses. Many of the onion storage facilities and sorting lines got destroyed or looted by Russians in the south of Ukraine.

Interestingly enough, prices for onions in Ukraine are already the lowest in the region. While the difference at the moment is not significant enough, the price gap may widen to the point when Ukraine will have a motivation to export onions.

We must point out that exporting onions in 2023/24 may be difficult as most countries in Europe and Central Asia have expanded area significantly responding to high prices in the whole region. On the other hand, Europe had bad weather conditions and heat waves again, which could impact crops in the Netherlands, Germany, and other countries, where not all of the onion fields are irrigated. Also, there are news about India limiting onion exports, which might support demand for onions in the Middle East.

Thus, it is not impossible that from September 2023 Ukrainian farmers will have to think about exports of onions as it is very likely that volumes of the harvest this year will be sufficient to satisfy domestic demand, assuming storage issue is resolved.

EastFruit

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