Onion prices have surged by 30-50% over the past two weeks due to a decrease in arrivals coupled with heightened demand in anticipation of Eid-al-Adha (Bakra Eid). Traders are now stockpiling onions, anticipating potential relaxation of government interventions aimed at price control.
Price Trends in Wholesale Markets
On Monday, the average wholesale price of onions at the Lasalgaon mandi in Nashik stood at INR 26 per kg, marking a significant increase from INR 17 recorded on May 25. Furthermore, the price of premium-grade onions, though they constitute a minor portion of the total trade volume, has exceeded INR 30 per kg at numerous wholesale markets across the state.
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The recent surge in prices primarily stems from a disparity between supply and demand. Onions entering the market from June onward originate from stocks held by farmers and traders. Farmers are hesitant to sell from their reserves, anticipating a price increase due to projected reductions in the 2023-24 rabi crop.
Impact of Export Duty and Domestic Demand
Despite a 40% export duty causing a slowdown in exports, traders assert that domestic demand for onions remains robust in anticipation of the upcoming Eid-al-Adha on June 17. “Demand for Maharashtra’s onions, particularly from the southern states, is notably high,” stated Vikas Singh, an onion trader hailing from Nashik, Maharashtra.
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“The primary factor driving the price surge is the farmers’ and stockists’ optimism regarding the potential removal of export duties by the central government. Operating under this assumption, they are withholding onions in anticipation of price escalation,” stated Ajit Shah, president of the Horticulture Produce Exporters’ Association.