Gold-silver ratio indicates more upsurge possible for the white metal.
Experts believe the rising prices may encourage farmers to bring in additional areas for under onion cultivation during the rabi season, which may boost the precious bulb's output, reports Dilip Kumar Jha.
Despite onion prices hitting Rs 130 a kg in the wholesale market, farmers have not gained enough to make a profit this season. Farmers and other stakeholders in the value chain estimate that 30 per cent crop damage this kharif season would result in a decline of about 2 million tonnes in output from Lasalgaon district alone. Similar crop damage across the country could lead to an onion shortage of nearly 7 million tonnes this year.
Farmers in Nashik district, Maharashtra - a major producer of onion - have started harvesting the premature crop to cash in on the high prices in mandis. Good-quality onion was quoted at Rs 93.50 a kg on the higher side. However, the poorest-quality onion was selling at Rs 25.50 a kg on Wednesday as against Rs 20 a kg on Tuesday. Thus, the model price of onion works out to Rs 70-75 a kg in Lasalgaon, translating into Rs 100-125 a kg in the retail markets of the country.
The industry body has issued two advisories in an attempt to restore jewellers credibility in the wake of the Rs 12,000-crore PNB-Nirav Modi scam, and recent defaults by two domestic jewellers - Goodwin and Rasiklal.
A WGC survey says that there is no dearth of gold demand, but there is lack of trust among prospective gold buyers, not only in India but globally.
The yellow metal now trades at a 0.5 per cent premium over its landed cost, compared to a 4 per cent discount in mid-September because jewellers have voluntarily withdrawn the display of cash price from their website.
Confidence had ebbed in the last few years due to default by some errant domestic retailers and exporters. Moreover, many jewellers are believed to have diverted the fund collected through monthly deposit schemes to pay 'mark-to-market' margins on various loans.
'The availability of vegetables has gone down due to fewer arrivals in wholesale mandis. Their supply was disrupted because of low yields and high spoilage,' says Shyam Bhimraoji Karlekar, chairman, APMC Wardha, one of the largest sellers of vegetables in Maharashtra.
With 3,000 tonnes of imported onion entering the market over the next fortnight, the price should start cooling off. Soon after, the new crop of onions will arrive, further reducing prices.
Scenario is precarious for urad with almost half the crop damaged in major growing states, tur quota of 400,000 tonnes already exhausted.
Onion is currently trading between Rs 70 and Rs 80 in retail markets across the country.
The worsening demand for jewellery has already started impacting jobs and karigars or goldsmiths.
Discounts and incentives are attractions jewelleres are offering along with new designs to woo customers to boost sales ahead of Diwali.
On the occasion of Chinese president Xi Jinping's two-day visit, Indian exporters are looking for a big boost in export of agricultural commodities, especially the ones that have been impacted by the ongoing trade war between the United States and China.
The industry alleges the government has been apathetic, despite their pleas for quick action. However, H2 may be different as The US-China trade war had opened a window for Indian exporters to ship more to America.
As gold prices turn prohibitive, traders fear a drop of as much as 50% in sales over the previous season.
Because of the reluctance to intervene structurally in the political economy of onion trade, the BJP is paying the price till today and might continue to do so in the forthcoming election to the Delhi assembly.
Assembly elections in Maharashtra are scheduled later this month. The farmer protests are likely to affect the results, especially in the onion-growing belt of Nashik.
With auctions unable to proceed, the median onion price declined 17 per cent or Rs 6 a kg to trade at Rs 30 a kg on Monday, with arrivals of around 500 tonnes.
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