After Tomato, Onion Prices Likely To Rise From Early September: Report

After tomato prices skyrocketed in different parts of the country, prices of onion are also expected to rise significantly to Rs 60-70 per kg in the retail market starting early September this year, according to Crisil research report, as cited by Moneycontrol.

The report further predicts that the onion prices would soften as supply improves in October. “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,” Crisil noted in the report.

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Unusual weather conditions disrupted the traditional supply schedules, it further said. Currently, the onion prices hover around at Rs 30 per kg.

The report further stated that high temperatures led to early maturity of the rabi crop across the key growing states of Maharashtra (49% of the total share), Madhya Pradesh (22%), and Rajasthan (6%) in February.

Unseasonal rainfall in these regions in March which affected the quality of onions and led to reduced shelf life to 4-5 months from 6 months. This further raised storage concerns and triggered panic selling by farmers.

However, due to the reduced shelf life of rabi onion and the panic selling in February-March, the supply-demand imbalance is expected to reflect in onion prices towards the end of August, during the lean patch, Crisil said.

Pushan Sharma, director at Crisil, says that onion prices should improve once the Kharif arrivals start in October, leading to softer prices. “But this lower realisation in onions has created a negative sowing sentiment among farmers for the Kharif 2023 onion crop. As a result, we expect acreage to decline 8 percent this year, and kharif production of onion to fall 5 percent on-year,” Crisil said in the report.

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“However, a major slump seems unlikely as annual production is estimated at 29 million metric tonnes – 7 percent higher than the average of the past five years (2018-2022),” Pushan said.

This report came after tomato prices have soared high in the market. Experts believe that the tomato prices are expected to soften by the start of this September.