Onion prices likely to hit Rs 60-70/kg in September

Onion prices are likely to start shooting up in the retail market towards the end of August before going up further to around Rs 60-70 per kg next month due to tightened supplies, a report said on Friday.

However, the prices will remain below the highs of 2020, it said.

"The supply-demand imbalance is expected to reflect in onion prices towards end-August.

"As per our ground interactions, prices are expected to show significant increase from early September in the retail market, reaching up to Rs 60-70 per kg during the lean patch.

"However, prices will remain below the highs of 2020," according to the report by Crisil Market Intelligence and Analytics.

The report stated that owing to reduced shelf life of rabi onion by 1-2 months and panic selling in February-March this year, 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.

Onion supplies will ease once kharif arrivals start from October, leading to softening of prices, the report said.

The price movement in the festive months (October-December) is expected to stabilise, the report stated.

During the January-May period this year, a fall in onion prices had offered some relief to consumers facing significantly costlier cereals, pulses and other vegetables.

However, this created a negative sowing sentiment among onion farmers for the kharif season.

"As a result, we expect acreage to decline 8 per cent this year, and kharif production of onion to fall 5 per cent year-on-year. Annual production is expected at 29 million tonnes (MMT), 7 per cent higher than the average of the past five years (2018-2022)," said the report.

So, a major supply crunch is unlikely this year despite lower kharif and rabi output. However, rainfall in August and September will determine plantation and bulb development of the onion crop, it added.