Onion prices drop on higher arrivals, weak demand

In anticipation of bumper production and increased fresh arrivals, onion prices have fallen by Rs 100 per 20 kg over the past four days. Traders anticipate further fall in the onion prices as arrivals will increase in coming days while exports remain dull.

At Mahuva market in Gujarat, arrival have been in the range of 15,000-16,000 bags (each of 50 kg) a day over the past ten days, while prices have fallen from Rs 250-300 per 20 kg to around Rs 150-200 per 20 kg at Mahuva.

Similarly at other markets in Gondal and Rajkot, wholesale prices hovered in the range of Rs 180-225 per 20 kg.

"Onion prices are falling as fresh arrivals have started since the beginning of this month. It will increase to 150,000 bags in February next year. Higher arrivals amid low demand may put pressure on onion prices in coming days," said Ghanshyam Patel, chairman of Mahuva Agricultural Produce Market Committee (APMC).

According to trader sources, on an average about 26,000-28,000 bags of onion arrive every day in Gujarat.

Gujarat mainly supplies onion to North Indian states like, Delhi, Punjab, Himachal Pradesh and others. In Nasik, onion prices hovered in the range of Rs 200-220 per 20 kg.

Bholabhai Patel, an onion trader located at Upleta town near Rajkot said, "We are expecting onion production to almost double in this year and in the present situation, onion prices may fall more by Rs 40-60 per 20 kg by end of this month."

He informed that export demand is very low at this time as minimum export price (MEP) is higher. If government reduces MEP to $300 a tonne, then the overseas demand may rise in the market.

Meanwhile, On Monday, the government had reduced onion MEP by about 30 per cent from $1,150 a tonne to $800 a tonne. However, traders feel this is insufficient for aggressive exports.

As per the Agricultural and Processed Food Products Export Development Authority (APEDA), onion production during 2012-13 stood at 16.30 million tonnes in India, previous year it was 17.51 million tonnes. Maharashtra is the largest onion producing state holding the share of 28.57 per cent in total production of the country. Karnataka and Madhya Pradesh has 14.69 and 13.19 per cent share respectively. Gujarat is having nearly 4.32 per cent share in India's total onion production.

The Directorate General of Commercial Intelligence and Statistics (DGCIS) data said that fresh onion export from India during 2012-13 was registered 1.63 million tonnes as against 1.30 million tonnes in 2011-12.