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Indian onion price show signs of recovery due to supply disruption

August 28, 2020

1 mins read

The Mintec price of Indian onions increased by 60% to INR 20,000/MT in the seven weeks to 26th August, in line with expectations of lower supply due to excess rainfall in southern India. In addition, supply chain disruptions as a result of lockdown restrictions and a higher percentage of rotting produce provided further support to the Indian onion price.

Indian onion markets have followed a bearish price trend since the start of 2020, due to a higher production estimate (7% up year-on-year to 23.45 million tonnes) for the 2019/20 marketing year (MY) and an international export ban. The export ban was overturned by the Indian government on the 15th March, to support the market and protect the interests of farmers. However, the change in policy became largely ineffective, as the coronavirus outbreak and subsequent lockdown restrictions led to further bearish sentiment in the Indian onion market via its effect on demand.

In response to the oversupply in the market, the National Agricultural Cooperative Marketing Federation (Nafed) intervened to reduce supply and set a target to procure 100,000 tonnes of onions in 2020, in order to bolster up prices. Additional government measures in the form of transportation subsidies currently lend further support to prices.

The Mintec price of Indian onions is expected to extend its recovery over the next few months, with continuing state intervention and recovering demand.

Ramnikh Kular

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