Onion prices fall on high arrivals, low demand

January’s sharp spurt cools off, as demand from domestic buyers and exporters moderates

After touching peak levels in recent weeks, onion prices at wholesale markets are showing signs of cooling. At Lasalgaon in Maharashtra, the average price quoted yesterday was Rs 1,175 a quintal as against Rs 2,150 a quintal on January 30.

The prices have almost touched the approximate levels of Rs 1,100 a quintal seen in the beginning of January. Prices went up last month on delay in arrival of new crop and report of some crop damage. Prices had touched Rs 2,331 a quintal in the wholesale market on January 31, creating turmoil among consumers.

Things seem to be getting normalised and the higher prices have also dampened demand. “Prices have fallen in the past week due to lower offtake of onion both domestic and exporters. Also, there is increased arrival at most markets in Maharashtra and Gujarat,” said a trader at the Nashik onion market.

According to market participants, with a rise in arrivals and less demand, prices have shown a downward trend. At the Mahuva market in Gujarat, prices were quoted at Rs 1,050 a quintal, down Rs 700-800 a quintal from a peak of Rs 1,800 a quintal at the end of January.

According to sources in Maharashtra, there is likely to be a 10-15 per cent decline in onion sowing this rabi season. “Last year was exceptional for production. This year, due to lesser sowing, we believe Maharashtra’s production will be around 4.5 million tonnes, close to the average of the past three years,” said an official from the Maharashtra State Agricultural Marketing Board at Nashik. In 2011-12, output was 5.63 mt.

In its initial crop projection, the National Horticultural Research and Development Foundation (NHRDF) estimated production at 16.6 mt for 2012-13 against 17.5 mt last year. Most of the production is consumed domestically; eight to 10 per cent is exported.

“Initial estimates show a dip in onion production this year. The rabi onion crop will be less because of drought-like condition in some parts. We believe onion production to be around 16.6 mt. However, sowing is still on in some parts, so, these cannot be final figures,” said R P Gupta, director, NHRDF.

Gujarat government data showed a drop in onion sowing of 71 per cent. The rabi crop was sown on 17,500 hectares this year, down from 61,300 hectares last year. In Maharashtra and Karnataka, sowing is estimated to be lower this year from last year’s 382,000 hectares (ha) and 177,200 ha, respectively.

Maharashtra, Karnataka and Gujarat, which constitute around 60 per cent of the country’s total production, were under the threat of a fall in production due to water shortage in key growig regions. However, industry estimates that the fall may not be that significant as feared due to improved sowing in other regions including Rajasthan and the eastern parts of the country.