Onion prices may remain high till February: Traders

Onion consumers are unlikely to get a respite from high prices until the first fortnight of February, when the new season crop from Pune hits the market.

Supply from Pune, the second largest onion producing district in Maharashtra after Nashik, is crucial and expected to ease the ongoing deficit. Till then, consumers will have to live with high prices, said Ashok Walunj, director of the Agriculture Produce Marketing Committee (APMC) at Vashi, Navi Mumbai. Arrivals from Pune begin generally in the first week of February and gradually pick up in the second week.

Onion developments in Maharashtra are relevant elsewhere, since 75-80 per cent of India’s onion supply comes from the state. Onion traded between Rs 30 and 45 per kg today in the Vashi APMC, almost range-bound for the past week. Barring the panic one day in which the price shot up to Rs 60 per kg in the wholesale market, onion has settled around Rs 35 per kg, significantly higher from the Rs 8-10 per kg around the same time last year.

Average arrivals during the first two days of this week were recorded at 100-110 trucks of 10 tonnes each. The basic reason for high prices is inadequate supply in proportion to demand. Despite the poor quality of onion, with hardly a day’s shelf life, the commodity’s supply failed to meet the rising festival and occasional demand, said a Mumbai-based veteran trader. Unless the demand eases, prices will not come down, he added.

When quizzed about the impact of the recent export ban, the trader said, “Last year’s stock was exhausted in November itself due to massive exports during the post-monsoon season. But barring a negligible quantity to Colombo, exports almost halted in October due to skyrocketing prices. Since then, no shipment was taking place. Hence, there is no vivid impact of the export ban.”

The crop was heavily damaged in Nashik due to unseasonal rainfall. Supply from Gujarat and the south was also hit severely because of high moisture content, resulting in massive spoilage. But the rainfall really benefited the crop in Pune, which on maturity will bridge the supply-demand gap, said Walunj. The release of 200 tonnes of imported Pakistani onion, held at the Navi Mumbai port, will not ease supply adequately, said Ajit Shah, president of the Indo Agro Produce Exports Chambers of Commerce.

Meanwhile, sentiment is likely to become more worrisome in the next fortnight, when the demand for Pongal emerges from the South. Generally, onion demand doubles four to five days ahead of Pongal. If last year’s trend continues, prices will see another jump next week, said a Nashik-based trader.

According to agriculture ministry sources, India’s onion output is likely to dip by over 12 per cent to 10.5 million tonnes in the 2010-11 crop year. Traders, however, estimate a further decline in production due to very poor yield.