India’s onion market is heading towards a potentially sharp price increase in the coming weeks, with the next major red onion crop from Maharashtra expected to arrive around a month later than usual. With export-quality onions from the current Garwa pink crop already limited, the supply gap could push prices to their highest level of the year between late September and the end of October.

According to Kiran Gangurde of Matoshree Fresh Foods, around 30–40% of the old Garwa pink crop remains available, of which 10–15% is suitable for export. The remaining export-quality onions are also approaching the end of their storage life, making availability increasingly difficult.

© Matoshree Fresh Foods

Despite the tightening availability, demand from export markets remains strong. Current shipments are moving mainly to the Middle East and Far East, with markets including Vietnam, Malaysia and Singapore reflecting stable demand.

The immediate supply relief from southern India is unlikely to be enough to ease the situation. The new crop has started arriving from Andhra Pradesh and Karnataka, but is largely directed towards the domestic market and will have limited impact on exports, Kiran says.

The bigger shift will come with the arrival of the next red onion crop from Maharashtra. Normally, the crop begins arriving around October, around Dussehra and Diwali, but this year weather conditions have delayed it by around one to 1.5 months.

© Matoshree Fresh Foods

This year’s weather impacts are apparent across production regions. “It rained more in Madhya Pradesh, which resulted in spoilage and lower production. The Maharashtra crop has also been affected by weather, contributing to the delayed arrival. Full-scale arrivals are expected only after November,” Kiran explains.

The delay is expected to create a difficult transition period for the market. With the old Garwa pink crop nearing the end of its storage life and the next major red crop still weeks away, exporters will increasingly have to compete with domestic demand for suitable onions.

Prices have already moved higher. Across Maharashtra, including Nashik, prices have risen from around USD 31-42 per quintal last month to approximately US $42–52 per quintal this month, an increase of around 25–30%, according to Kiran.

Kiran predicts the most pronounced increase between 25 September and 30 October, before the new crop starts to close the supply gap. He estimates that prices could reach US $84-94 per quintal during this period if demand continues to outpace supply.

For exporters, however, higher onion prices are only part of the challenge. Logistics costs have also increased significantly, particularly for shipments to the Gulf. “Transportation costs have increased a lot due to the war.” For destinations including Oman, Kuwait, Qatar, Bahrain and the UAE, the combined cargo and transportation cost for a shipment can reach around US $26000-31500, he says.

© Matoshree Fresh Foods

Asian destinations offer a more favourable freight equation, but high onion prices are still limiting the ability of exporters to compete. The supply constraints, however, are not limited to India. Pakistan is also facing high onion prices and elevated transportation costs, reducing its availability in international markets. With production and logistics challenges affecting multiple origins, the broader supply situation is contributing to a firm market, Kiran says.

Afghanistan, which has supplied onions to India in the past, is also affected by regional disruption. Egypt and Turkey could become potential sources if additional imports are required, Kiran says, although it is not certain that imports would take place.

For Indian exporters, the immediate challenge is securing enough suitable onions to meet demand through the gap between the old crop and the delayed new crop. Kiran expects the period from late September through October could prove to be the most expensive part of the season.

For more information:
Kiran Gangurde
Matoshree Fresh Foods
Tel: +91 92 73 683 400
Email: [email protected]