"What happened is that in 2024, exports were extended until the end of June, but this time, shipments practically stopped on May 31," explained Lucio Reinoso, Secretary of Agriculture of Río Negro.
The demand for Argentine onions from Río Negro correlates with weather patterns impacting peak demand from March to May. Favorable weather in Brazil resulted in strong yields in its southern and central regions, reducing the demand window this year. Last year's outstanding production did not recur, impacting export volumes.
The devaluation of the Brazilian real concerned producers throughout the summer. This financial shift was exacerbated by Brazil's increased onion supply, signaling the export season's conclusion. The season, commencing in March, saw lighter activity compared to the previous year, which had witnessed record shipments, despite a brief sales increase during May's first weeks, as noted by the Río Negro Department of Agriculture.
Southern Argentina, particularly Río Negro, markets onions beginning in January. The cycle runs through September with "late" or "storage" onions for export, traditionally peaking from April to June. This aligns with low domestic supply in Brazil, as Santa Catarina's onions phase out and prior to central region harvests in Minas Gerais and Goiás.
Brazil's onion demand is notably inelastic. Although domestic production generally matches consumption, about 1,500,000 tons, Brazilian yields vary significantly due to weather, unlike Argentina's stable output. This year saw no adverse weather effects, yet Argentina's onion exports to Brazil decreased notably in June.
The commencement of harvests in Minas Gerais and São Paulo, marked by good yields, intensified local market competition, as reported by the Río Negro Department of Agriculture. "With the start of the harvest in the central region, the marketing season for Argentine onions in Brazil ends," they stated.
Price dynamics, following supply and demand trends, began with prices ranging between 25 and 35 Argentine pesos per kilo (approximately $0.27 to $0.38), remaining steady with slight increases in early May.
From January 1 to May 31 this year, Río Negro's plant transit documents for onions reached 113,229 tons. Last season's 7,800 hectare onion planting saw approximately 50% of the output sold. Reinoso highlights, "50% is destined for export and 50% for the domestic market."
At this time last year, over 85,000 tons had been shipped, compared to 54,800 tons this year. This reflects the prior season's demand peak with less planted land in 2024, registered at 6,890 hectares, compared to the past season's 7,800 hectares.
As Brazil absorbs 90% of Argentine exports, declining demand presents challenges. Reinoso states, "Relying on a single client or market, even if initially profitable, represents a considerable risk." Diversifying exports to other countries is deemed crucial.
In March, the 26th Mercosur Onion Seminar saw efforts to extend market scope and achieve resource-efficient local production, as suggested by Reinoso.
Source: Argenpapa