As India is dealing with surging prices of tomatoes, onion prices have experienced a significant surge in key markets across India, with some places even witnessing a doubling of prices. This two-fold surge has been seen at prominent markets including Maharashtras Pimpalgaon and Lasalgoan Agriculture Market Committee, which is Asias largest onion market.The price increase has been particularly sharp in the recent month, rising from ₹1,200 per quintal on August 5 to ₹1,900 on August 7. By August 9, the prices had reached ₹2,500 per quintal.Currently, retail prices for onions are around ₹30 per kilo. Analysts predict that these prices will continue to rise in the coming weeks, potentially reaching ₹60-70 per kilo by early September.The hike in prices can be attributed to a combination of factors. The reduced onion acreage this monsoon, coupled with diminished carry-forward rabi (spring harvest) stocks, has led to speculative buying and price escalation.The kharif (autumn harvest) area dedicated to onion cultivation as of July 31 was 13% lower than the previous year, with 68,000 hectares being sown, according to data from the agriculture ministry.“Last years number was already low year-on-year (YoY). The lack of rainfall in most areas of Maharashtra has been a drag on sowing this year. Seed sales of onions have also fallen by about 30 percent this year,” noted independent farm sector analyst Deepak Chavan, highlighting the impact of adverse weather conditions on onion cultivation.Moreover, stocks from the rabi season, cultivated between December and January, are anticipated to be lower due to a drop in production earlier this year. A report by the market analytics company CRISIL indicated that rabi stocks in the open market could substantially decline by the end of August.“Rabi stocks in the open market are expected to decline significantly by the end of August instead of September, extending the lean season by 15-20 days, which is likely to expose the market to tightened supplies and high prices,” Pushan Sharma, Director at CRISIL, wrote in an August 4 report.Hoarding important cause of onion price hikeThe challenges in the onion market are further exacerbated by hoarding practices. Some traders have reportedly begun hoarding onions in anticipation of an impending shortage.“Traders in the industry have started hoarding onions, storing them in large quantities as they expect a shortage to soon take over the market,” revealed the head of a Maharashtra APMC mandi, who preferred to remain anonymous.Experts suggest that a decrease in onion prices is unlikely until October when the next supply of onions is projected to enter the market. However, a major slump seems unlikely due to the annual production estimate of 29 million metric tonnes, which is only 7% higher than the five-year average, according to the CRISIL report.
