Onion spot prices soar 31% in 2 days, likely to stay high

Onion soars on stock building

Onion prices have soared up to 31 per cent in the past two days on stock building by bulk consumers, stockists and large farmers. The sudden spurt in bulk demand has pushed market sentiment, supported by this year’s lower output estimates on unseasonal rain, followed by hailstorms

In the benchmark Pimpalgaon (Maharashtra) spot mandi, the price rose 31.2 per cent on Monday to trade at Rs 1,050 a quintal, against Rs 800 a qtl on Saturday, showed data from the National Horticultural Research and Development Foundation (NHRDF), a Nashik-based premier research house. Similarly, in Chennai, onion moved up 20 per cent on Monday to Rs 1,800 a qtl from Rs 1,500 a qtl two days earlier. All other markets are following the trend, though to a lesser extent.

In a rush to ensure large quantities for future use, bulk consumers have jumped into the market to book as much as possible. Also, stockists and large farmers who’ve built holding capacity over the years approached small farmers directly. “Consequently, supply to spot mandis fell sharply. In short, bulk consumers and stockists are directly dealing with farmers to ensure supply, with the objective of selling in the lean season,” said R P Gupta, Director, NHRDF.

Before the rains and hail in March–April, the country’s output was estimated to hit a record 19 million tonnes (mt) in 2013-14, against 17.51 mt in 2012-13 and 16.8 mt in 2011-12. Now, however, output is expected to decline 15-20 per cent, owing to crop damage.

“Demand is largely seen from bulk consumers and stockists. Therefore, onion prices will remain elevated this year, due to lower output. We cannot rule out prices hitting last year’s level,” said Atul Shah, Director, Agricultural Produce Marketing Committee, Pim-palgaon. Last year, consumers shed tears when onion prices hit Rs 80 a kg and Rs 100 a kg in wholesale mandis and retail marketplaces, respectively.

The harvesting season is about to end across the country and analysts would get a clearer picture on crop estimates. Lower output might affect onion exports, too. In volume terms, these fell by 25.5 per cent to 1.36 mt during 2013-14, against 1.82 mt the previous year. But an increase in per unit value sent the realisation up 25 per cent to Rs 2,877 crore in FY14 as compared to Rs 2,294 crore the previous year. India exports to North Africa & West Asia, and a number of neighbouring countries.