Wholesale Onion Prices Shoot Up, Retail Rates may Stay Unaffected
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.