The overall price of onion is stable and has improved with good demand amidst tight supply.
The harvest is expected to be complete for onion in India soon. Currently, there is limited arrival of fresh onion in the market due to the crop loss of 20 to 30 percent between December and February. The cause of the crop damage was extreme weather and pest infestation.
Experts predict that there will be a production increase of 10 to 15 percent in Gujarat despite the crop loss. The result of increased yield is due to the rise in sowing acreage. Market experts, however, are apprehensive about the quality and the shelf life of the onion due to the pest attacks the crop faced earlier.
With the news of limited supply and concern about the quality of the crop, the prices are firming up. The processors for onion are in a short position now and expect softening of the cost of the fresh onion after the harvest completes. Traders and processors believe the peak arrival of raw material during the second quarter of 2022 will drive the price down for a while when they make the maximum purchase.
The harvest of the winter onion crop in Egypt is complete, and the summer crop harvesting will start from May/June.
There is a limited supply of the winter crop from Egypt as the demand is high across the destination, keeping the price firm in the market.
Factors that have helped the onion price stay firm are increased labour costs and inflation. But the market is expected to witness a downward trend from May onwards as the new crop arrives in the market after the harvest.
The overall production of onion is expected to decrease compared to last year due to the drought the planting regions faced. In the US, the onion market can come under pressure with the transport and manufacturing costs going up by 20 percent or more as the war between Ukraine and Russia can impact it further.
Though the difficulty that the US faced with port congestion is over, the logistical challenges with price hikes in the freight remain a concern. In addition, the price will be impacted by the high inflation, disappointing crop size, and the onions’ quality. Therefore, it is expected that US onion prices can increase about 15 percent in the coming days.