Whole­sale Onion Prices Shoot Up, Re­tail Rates may Stay Un­af­fected

The Economic Times - - Companies & Economy - Jayashree.Bhos­ale @times­group.com

Pune: Whole­sale onion prices have risen sharply in the past two days, which ex­perts at­tribute to mar­ket ma­nip­u­la­tion by a hand­ful of traders. But re­tail onion prices are not likely to shoot up in the weeks ahead un­less unseasonal Septem­ber rain dis­rupts the har­vest in Kar­nataka and Andhra Pradesh.

Traders said re­tail prices are un­likely to go above ₹ 50-`60 per kg, un­like some pre­vi­ous years when it crossed ₹ 100.

With in­ter­na­tional mar­kets ad­e­quately sup­plied and prices at mod­er­ate lev­els, about 150 con­tain­ers of onions are sched­uled to ar­rive at In­dian ports by the end of this month and early Septem­ber, traders said. Higher prices may also en­cour­age greater plant­ing, which will lead to an­other glut in De­cem­ber.

In the rainy sea­son, In­dia con­sumes onions from stored stocks, which were re­plen­ished to a record level af­ter a bumper har­vest that left farm­ers strug­gling with low prices un­til June. Of­fi­cial data shows that out­put rose 3% to 21.6 mil­lion tonnes in 2015-16 be­cause of good weather al­though area un­der onion de­clined from 13.20 lakh hectare to 12.70 lakh hectares mainly due to poor prices.

How­ever, whole­sale prices at the Lasal­gaon mandi dou­bled in two days to ₹ 26 on Friday. In July, onion ar­rival at the mandi, at 5.75 lakh quin­tal, was the high­est in last five years, while July ex­ports are es­ti­mated to be only 80,000 quin­tal. A sec­tion of the trade has al­leged traders stored huge stocks of onion in July and drove prices up on daily ba­sis.

Mar­ket sources said traders’ strat­egy is to buy very small quan­ti­ties of onion at higher prices, which pulls up the over­all av­er­age prices.

On Au­gust 3, the traders opened the mar­ket at ₹ 22-23 and in­creased it to ₹ 25-26 by 1 pm, which led to panic in mar­kets across the coun­try. Re­spond­ing to the price, farm­ers brought huge quan­ti­ties to the mar­kets.

"As the price in­crease ear­lier in the day was ma­nip­u­lated,

traders could not buy all the onion that came to the mar­ket by 3 pm prices crashed to ₹ 16-17 per kilo, forc­ing the mar­ket com­mit­tee to keep the auc­tions open next day, de­spite it be­ing a hol­i­day," said a source.

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