Onion, potato prices fall on higher supplies

After a month of sudden price rises, potato prices have started moderating in the spot market, following a similar trend in onion prices. While onion prices fell up to 40 per cent, prices of potatoes declined up to 20 per cent in the past two weeks.

Following delayed rainfall in the sowing season, high moisture due to record low temperatures and unseasonal rainfall during the harvesting period, onion and potato prices surged since January. Owing to higher supplies and the fact that the government said it would levy a minimum export price on the commodity, onion prices fell in the last two months.

However, potato prices remained high amid reports of the crop being damaged in major producing centres. But harvesting picked up pace, owing to less moisture in the soil. Consequently, supply increased in the last two weeks.

Data compiled by the National Horticulture Research and Development Foundation showed onion arrivals in spot mandis rose to 26,989 tonnes as on March 3, against 17,455 tonnes two weeks earlier. Supply disruption in some regions scaled down potato supplies in spot mandis from 11,664 tonnes as on February 19 to 10,519 tonnes as on March 4, helping arrest the fall in prices.

Prerna Sharma, an analyst with Emkay Commotrade, believes potato prices may decline further, as the commodity has turned weak in the short term, providing scope for additional sell-offs. March potato contracts on the Multi Commodity Exchange (MCX) could fall by up to Rs 60 to about Rs 740 in the near term. Today, the near-month contract on the MCX was trading at Rs 749 a quintal, a 0.48 per cent fall from yesterday.

With increased acreage, this season, potato production is expected to be 10-15 per cent higher than last season's estimated output of 32-33 million tonnes (mt). While Uttar Pradesh is expected to produce 15 mt, compared with 13-13.5 mt last year, West Bengal's production is estimated at 9.5 mt, against 8.5 mt last year.

Currently, the demand for onions and potatoes in the spot market is subdued. However, it is likely to revive next month.