India: Cut in onion export price fails to cheer exporters

India: Cut in onion export price fails to cheer exporters

Despite a drastic cut in the minimum export price (MEP) for the second time within a fortnight, onion prices failed to take a leap, as high arrivals kept the commodity under pressure. Prices in the spot Vashi Agricultural Produce Market Committees (APMC) yard plunged 10 per cent on Tuesday. Newly harvested onion is quoted at Rs 9-10 a kg, a decline from Rs 10-11 a kg the previous day. Similarly, the commodity for the old season was sold at Rs 5-7.5 a kg, a decline of Rs 1 from the previous day. “Onion prices fell in the spot market due to high arrivals of new crop from Nashik and Gujarat. The trend is likely to continue for the next fortnight,” said a Vashi-based trader. Total arrival in India’s largest mandi, Pimpalgaon in Maharashtra, was 600-700 tonnes, a rise of 50 per cent from 400-450 tonnes a fortnight ago. Half the old stock is being released by large stockists, who held the commodity in anticipation of higher price. Similarly, in Pimpalgaon, total arrivals were 400 tonnes, up 40-50 per cent in a fortnight. In Vashi, 900-1,000 tonnes hit the mandi which Ashok Valunj, director of the APMC, consider as normal during this season.

“Generally, arrivals increase between November 15 and December 15, as farmers from both Maharashtra and Gujarat harvest their crop in order to vacate the field for wheat sowing. Hence, arrivals usually hit mandis in full swing, which keep the price down. But, we assume price will recover in 15 days, when arrivals slow and export demand revives,” said Valunj. During this season, old stocks, estimated to be between 2 and 3 per cent, is usually shipped due to high moisture content in new season crop. However, the price is unlikely to decline from this level, as farmers may delay harvesting in case it falls below the current level. The government on Monday cut MEP by $100 to make the commodity competitive in global markets. With this decline, all varieties of onion, except Bangalore Rose and Krishnapuram, can be exported at $250 a tonne free on board (FoB). In the previous cut, the commodity was allowed to be shipped at $350 a tonne. Similarly, for Bangalore rose onions and Krishnapuram onions, the MEP was brought down to $300 a tonne from $400 a tonne earlier.

Immediately after the last revision on November 18, Union agriculture minister Sharad Pawar had hinted at a further price cut for exporters. The cut in MEP to $350 a tonne had failed to yield any substantial results, as onions continued to sell at higher rates than those from China and other countries, which are below $300 a tonne. India exports onion to Sri Lanka, West Asia and Malaysia. Today, the offtake from Malaysia is a bit slow, partly compensated with higher orders from Sri Lanka. Traders believe Malaysian demand would rebound in a week.

India’s onion exports has declined by 22 per cent during April-November. Total exports were 905,150 tonnes so far this year as against 1.12 million tonnes around the same time last year. India is the second-largest producer of onions in the world, after China. Onion production is estimated at 15.14 mt in 2011-12 (July-June), higher than the previous year’s output of 14.56 mt.Total arrival in India’s largest mandi, Pimpalgaon in Maharashtra, was 600-700 tonnes, a rise of 50 per cent from 400-450 tonnes a fortnight ago. Half the old stock is being released by large stockists, who held the commodity in anticipation of higher price. Similarly, in Pimpalgaon, total arrivals were 400 tonnes, up 40-50 per cent in a fortnight. In Vashi, 900-1,000 tonnes hit the mandi which Ashok Valunj, director of the APMC, consider as normal during this season.

“Generally, arrivals increase between November 15 and December 15, as farmers from both Maharashtra and Gujarat harvest their crop in order to vacate the field for wheat sowing. Hence, arrivals usually hit mandis in full swing, which keep the price down. But, we assume price will recover in 15 days, when arrivals slow and export demand revives,” said Valunj. During this season, old stocks, estimated to be between 2 and 3 per cent, is usually shipped due to high moisture content in new season crop. However, the price is unlikely to decline from this level, as farmers may delay harvesting in case it falls below the current level. The government on Monday cut MEP by $100 to make the commodity competitive in global markets. With this decline, all varieties of onion, except Bangalore Rose and Krishnapuram, can be exported at $250 a tonne free on board (FoB). In the previous cut, the commodity was allowed to be shipped at $350 a tonne. Similarly, for Bangalore rose onions and Krishnapuram onions, the MEP was brought down to $300 a tonne from $400 a tonne earlier.

Immediately after the last revision on November 18, Union agriculture minister Sharad Pawar had hinted at a further price cut for exporters. The cut in MEP to $350 a tonne had failed to yield any substantial results, as onions continued to sell at higher rates than those from China and other countries, which are below $300 a tonne. India exports onion to Sri Lanka, West Asia and Malaysia. Today, the offtake from Malaysia is a bit slow, partly compensated with higher orders from Sri Lanka. Traders believe Malaysian demand would rebound in a week. India’s onion exports has declined by 22 per cent during April-November. Total exports were 905,150 tonnes so far this year as against 1.12 million tonnes around the same time last year. India is the second-largest producer of onions in the world, after China. Onion production is estimated at 15.14 mt in 2011-12 (July-June), higher than the previous year’s output of 14.56 mt.

Source: business-standard.com

Publication date: 12/1/2011

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