The Economic Times reports that onion prices have surged by 30-50% over the past two weeks due to reduced arrivals and increasing demand ahead of Eid-al-Adha (Bakra Eid).

Traders are holding onto stocks, anticipating potential easing of government interventions aimed at price control. At Lasalgaon mandi in Nashik, average wholesale onion prices climbed to Rs 26 per kg on Monday, up from Rs 17 per kg on May 25. Top-quality onions, which represent a small fraction of the total traded volume, now exceed Rs 30 per kg in many Maharashtra wholesale markets.

The price hike is primarily driven by an imbalance between supply and demand. Onions available in the markets from June onwards come from stocks held by farmers and traders. Farmers are hesitant to sell, expecting prices to rise further due to a projected decline in the 2023-24 rabi crop.

Despite sluggish exports caused by a 40% export duty, domestic demand remains robust, especially with Eid-al-Adha on June 17. Vikas Singh, an onion trader from Nashik, noted, "There is strong demand for Maharashtra's onions, especially from the southern states."

Ajit Shah, president of the Horticulture Produce Exporters' Association, mentioned that optimism among farmers and stockists about the removal of the export duty is contributing to the price increase. "Farmers and stockists are holding onto their onions, expecting prices to rise if the central government removes the export duty," Shah explained.