NCDEX drops onion futures plan

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The National Commodity and Derivative Exchange (NCDEX) is unlikely to go ahead with onion futures trading while it is set to launch spot trading in coffee and maize, a top exchange official said. “We have received approval from the Forward Market Commission (FMC) for futures trading in onion, but have decided to stay away,” NCDEX’s managing director, P H Ravikumar said.

Onion is highly politicised, Ravikumar said, adding, besides onion “is also difficult to store as the commodity is mainly dry outside.” Onion prices which had shot up sharply a few months ago, have now tumbled on mounting arrivals and subdued export demand and are expected to remain weak for the next few months, traders said. Wholesale price in the country’s largest onion trading hub, Lasalgaon in Maharashtra, fell to its lowest level at Rs 365 per 100 kg, from a peak of Rs 1,951 on October 1.

Onion prices slipped following the government’s announcement of an action plan to check rising prices and increase onion supply, say commission agents. Onion prices are likely to drop as output is projected to go up by 14% in 2007-08, with the area under onion crop likely to increase in the ongoing kharif season.

Production in the current kharif season is likely to be at 1.5 million tonne with as much as 20% of the total output being produced in the kharif season. Onion is produced in three seasons-kharif, late kharif and rabi and harvested during July-October, January-March and April-June, respectively, onion trader, Anant Bhave, said.

The kharif season onion harvest contains high moisture and reduces its shelf life, forcing farmers to bring their produce to market as early as possible, Bhave added. “After the soft launch of spot trading in sugar, we are now launching full-fledged spot trading in coffee in six weeks period followed by spot trading in maize,” Ravi Kumar said.