Onion prices rebounded on Friday after dropping to an eight-month low, after the Centre notified the lowering of minimum export price (MEP) to $350 a tonne.

The modal price or the rate at which most trades took place in onion has crashed to Rs 421 a quintal on Thursday at the Lasalgaon Agricultural Produce Marketing Committee yard due to lack of demand. On March 11, onion's modal price had touched Rs 350 before rising to over Rs 1,000 a quintal in September.

Friday's rebound was aided by last night's notification by the Commerce Ministry on the revision of MEP from $475 that was fixed in September soon after the Centre lifted a ban on onion exports. Subsequently, the Centre has cut the MEP for Bangalore and rose onions to $400 ($475).

“Generally, there is subdued demand in the market. Karnataka onions, too, are contributing to this trend,” said Mr Madan Prakash, Director of Chennai-based Rajathi Group of Companies that exports agricultural produce.

The kharif onion crop in Karnataka has been good this year, as also the quality. Usually, arrivals tend to drop around October-end and the market begins to get damaged crop. Surprisingly, this year arrivals continue even now with the quality being good.

Fortunately for onion growers, kharif onion harvest that begins in areas around Pune at this time of the year usually has been delayed.

“Export demand is also minimal. Demand from the Gulf is as usual. Sri Lanka has delayed its purchase,” said Mr Prakash.

However, countries such as Sri Lanka, Malaysia and Singapore will start looking for Indian onions soon since there is no alternative for them.

“The lower MEP could also induce them to get back to market,” Mr Prakash said.

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