Gansu onion prices fall sharply, the 2017 market trend may reverse

Original title:Gansu onion prices fall sharply, reversing the situation may have to wait until next year

According to a report by China National Radio's "Sannong China," this year has been an especially thrilling one for the onion market. From the beginning of the year, the domestic onion market was extremely sluggish. Just when everyone was feeling disheartened, onions suddenly rallied, not only dodging the price-cutting wave of Black October, but also seeing prices rise steadily afterward. This kind of comeback surprised many people.

But recently, this spectacular show has once again taken a turn. Entering December, reporters visiting multiple locations found that onion prices had once again dropped noticeably, and in places like Gansu and Shandong, there were also phenomena such as excessive stock and inventory buildup.

In early December, onion prices once again declined along with the sharply dropping temperatures. At a vegetable wholesale market in Jiuquan City, Gansu Province, reporters saw that compared to the high spirits of October and November, the onion wholesale stalls now seemed particularly deserted. Wholesaler Boss Liu told reporters that in just half a month, onion prices at the Gansu wholesale market had already fallen by 25%.

Boss Liu: A while ago prices were still rising, now they've slid down again. In July it was 300 to 400 per ton, in October it was over 1,000 per ton, and now it's slid back to over 800, over 900.

Boss Liu told reporters that in previous years in December, onion prices should have risen slightly due to a lack of supply, but this year is completely the opposite, because not only is there no shortage of onions in the warehouses, but the stock is already full.

Boss Liu: A while back our onion inventory was full. This year's inventory is larger than the past two years, and there's also too much goods going into processing plants. Those who come later can only sell to them cheaply.

Reporters learned that compared with the same period in previous years, the current onion stock has increased by fully about 30%. Excessive onion inventory in Gansu Province has not only caused local prices to keep falling, but also driven slight price drops for onions in cold storage in other regions. Fortunately, however, other regions have not seen a situation of supply exceeding demand. Wang Lingru, an onion purchasing agent in Feng County, Jiangsu.

Wang Lingru: Prices are sliding down a bit. Now yellow onions are 1,200 per ton. Inventory is low, and the goods in our warehouse have already been sold off.

Wang Lingru said that onions in Gansu come to market late, so they naturally sell slower than in other regions. Add to that the increased planting area this year and the increased volume of onions coming to market, so by winter they simply cannot all be sold, resulting only in a backlog, which causes prices to fall.

Wang Lingru: Onion prices in Gansu will have to keep sliding, because Gansu has a lot of onions, and theirs only come down in September, while ours come down in May.

Zhuochuang analyst Bian Tingting told reporters that this year onion prices have gone through roller-coaster-like changes, and the main reason behind these changes is excessive increase in onion production. Add to that the relatively good weather conditions in the main producing areas, which brought a bumper harvest of onions, so market supply became even more abundant. Obviously, the effect of the sharp increase in onion production had still not been absorbed by the end of the year.

Analyst: Gansu's onion planting area this year increased by 30,000 to 40,000 mu compared with last year. When they first came to market, it was precisely because of the large area that prices were consistently poor from July to September. At the lowest point, yellow onions dropped to two or three hundred per ton. It was only after October, when traders began stocking up, that prices started slowly rising.

Because onion prices were relatively low in early October when traders were stocking up, purchasers all began competing to buy. But no one expected what impact blind stockpiling would bring later on. Analyst Bian Tingting believes that the current decline in onion prices once again is actually in response to changes in inventory.

Analyst: In early October, onion prices were relatively low, and traders stockpiled in large quantities. But at that time traders only thought about the stocking phase and did not expect that after October, onion inventory would become quite large. The massive growth in inventory had a certain psychological impact on traders, so the decline in onion prices is a trend that follows inventory.

So how should Gansu Province handle its large inventory of onions? Local growers also expressed confusion about this. Wholesaler Boss Liu told reporters that onions that cannot be sold this year can only be kept until next spring, to be sold together with newly marketed onions from the south. But in this way, it may cause the onion market in February and March next year to once again see excessive supply and continued price declines, repeating this year's mistakes.

Boss Liu: Goods are still moving now, just not as much as before.

Reporter: So do we currently have a situation of unsold stock piling up?

Boss Liu: Oh, not yet, but there is still this worry. If there are leftovers, we'll keep them for now and wait until February or March next year to sell. Anyway, in that case next year's situation may not be very good either.

Analyst Bian Tingting predicts that if there is no impact from extreme weather or external factors later on, by February or March next year the difficult situation for onions may still be impossible to change. So stock holders should still not blindly hold back sales. They should promptly understand market information and sell onions in cold storage at the right time.

Analyst: Judging by the current inventory trend, if there is no major rain or snow or impact from extreme weather later on, onions will still show a downward price trend, easy to fall and hard to rise.