As new crop comes in, onion prices ease a tad

After scaling record highs in recent weeks, onion prices have begun softening as farmers have started bringing in the new crop to markets in Maharashtra and Gujarat. Onion prices had soared to record levels in recent weeks as excess rains hit kharif output in the key producing States of Mahrashtra and Karnataka. Retail prices, too, are showing signs of easing in some States.

With a huge stock of local onions coming into the Lasalgaon market, rates dropped to ₹4,500 per quintal on Tuesday. Onion trader Jaydutt Holkar told BusinessLine that the rates may come down further this week. “In the last couple of days, the local farmers have been bringing onion in huge quantities. Other markets in the country are also getting sufficient stocks to cater to the market need. This has resulted in the price drop,” Holkar said.

Plea to lift stock limits

Also, lower demand and the arrival of imported onions into markets have contributed to the softening trend, trade sources said. Onion traders and farmers in Lasalgoan have demanded that the government lift the stock holding limit on wholesale traders, which remains at 25 tonnes. The Centre on Monday cut the onion stockholding limits imposed on retail traders to 2 tonnes from the recently-revised 5 tonnes as it suspected widespread hoarding by traders. However, there has been no change in the stockholding limits on wholesale traders.

“There is no reason to continue the stock holding limit as enough onion is coming to the market. More than 10,000 quintals of onion came to Lasalgaon market by noon on Tuesday. But as traders have stock limits, they were unable to purchase the onion from farmers. This will have an impact on onion prices in cities as wholesale traders would be purchasing and sending limited stocks to cities” Holkar added.

The incessant and untimely rains in September-October this year had left onion growers in Karnataka, Maharashtra and Gujarat in tears as much of their crop was submerged.

This delay in the new crop, coupled with shorter carryover stocks, caused the bulb to hit a price level not seen in at least eight years. In November, the modal price at Lasalgaon market in Maharashtra — India's largest Onion wholesale market — averaged ₹4,534 a quintal, the highest level since 2011. Total arrivals hit 15,119 quintals for the month, the lowest for the period. Further, the modal price hit a peak of ₹7,501 a quintal at the beginning of December.

“We were getting small quantities in arrivals from Gujarat markets. But now the new onion crop has started arriving from Maharashtra as well. And there is a sudden increase in arrivals in the past couple of days. This has caused prices to crash from its peak levels and we may see them settle somewhere around ₹40 in a few days,” said Ashok Walunj, a leading onion trader and former director at APMC-Vashi.

Read: Onion price tracker: Tuesday, December 10

The increase in arrivals along with opening of imports has pressed the brakes on rally in onion prices. “The onion crop was delayed. In addition to that, the old stock was limited, which fuelled prices. Looking at the spiralling prices, farmers rushed whatever crop they had to the market. We are seeing arrivals improving in a phased manner. Prices will remain under pressure from now on,” said Ghanshyambhai Patel, Chairman, Mahuva APMC, near Bhavnagar, in Gujarat. For Rabi season, Gujarat has reported overall onion sowing on 21,764 hectares, which is about 4,500 hectares higher than last year.

Retail prices also ease

Retail onion prices, while still high, are easing. The bulb was cheapest in Jhansi on Tuesday, according to government data, with the price there falling to ₹40, from ₹45 on Monday.

In the north, onions were the most expensive at the retail level in Gurgaon, at ₹120 a kilo.

In the west, while Panaji saw onions sold at ₹165, the highest in the country, cities such as Ambikapur, Sagar and Gwalior sold it at ₹50 a kilo. In the East, the price was the highest in Kolkata, at ₹140 a kilo, whereas in Gaya, it was as low as ₹69.

In the North-East, cities such as Itanagar and Agartala sold the bulb at ₹120 a kilo, while the price was ₹94 in Guwahati.

In the South, it was highest in Kozhikode, Mayabunder and Thiruvananthapuram, at ₹160 a kilo, whereas in Kurnool, the price was ₹72 a kilo.

(With inputs from Annapurani V in Chennai)

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