Onion prices have begun to stabilise around Rs 1,000 a quintal in markets around growing areas in Maharashtra and Gujarat. But prices are likely to rule firm despite the kharif crop beginning to arrive in markets.

“Arrival of the new crop will pick up after November 15, but prices will rise marginally or remain at current levels. Chances of drop in prices are remote,” said R.P. Gupta, Director of the National Horticultural Research and Development Foundation.

“Thanks to a better Karnataka crop, onion prices have not soared,” said Madan Prakash, Director of Chennai-based Rajathi Group of Companies that exports agricultural produce.

Currently, onion prices are ruling between Rs 900 and Rs 1,100 a quintal, depending on quality. On Friday at the Lasalgaon Agricultural Procude Marketing Committee yard, the modal price or the rate at which most trades took place was Rs 925 a quintal with over 1,100 tonnes arriving in the market.

A major reason for the rise in onion prices in the last few weeks has been shortage of quality produce. The situation has been compounded by a 50 per cent drop in the area under kharif onion.

“Even the area under late kharif onion is lower,” said Gupta. “That’s why we see scope for onion prices rising by another Rs 100-200 a quintal,” he said. “We expect prices to increase even after Diwali due to shortage. Export demand, too, is good,” said Prakash.

“Export is just about normal due to Pakistan crop’s entry in the global market. Even Iran’s crop has hit the market there,” said Gupta.

“The crop in Pakistan or Iran is not higher. So, their effect will be limited,” said Prakash.

“Indian onion still commands market in the Far-East,” he said, adding that Sri Lanka could look to buy after Diwali.

On rabi onion prospects, Gupta said lack of water in Maharashtra, Karnataka and Gujarat could become an issue.

“Onion production in Madhya Pradesh is improving. But market support there is lacking, and, therefore, farmers feel discouraged,” Gupta said.


(This article was published on November 2, 2012)
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