EastFruit analysts draw attention to another extension of the ban on onion exports, recently announced by the Indian government. The previous onion export ban was introduced in December 2023 and was valid until March 31, 2024, but it has now been extended for an indefinite period.
The government argued that domestic onion prices have increased by 43% over the year to about $0.3 per kg, which is considered a high price for India. For comparison, the average wholesale price for onions in Ukraine is now approximately the same, and this price is one of the lowest in the recent years.
With India being the world's largest onion exporter by volume, it is not surprising that the decision to extend the onion export ban has led to nervous reactions in the region's onion markets. There is real panic in the onion market in Bangladesh where prices for this product soared by more than 10 American cents per kg after India's decision.
Note that climate change is the main reason for the decline in onion production in India. In particular, the lack of precipitation in many production regions has led to a decrease in onion yields. Since onions are one of the most consumed vegetables, especially among the poor in India, their impact on both inflation and voter sentiment is very significant.
Apart from Bangladesh, the largest importing countries of onions from India are Malaysia, UAE, Sri Lanka, Nepal, Indonesia, Qatar, Vietnam, Oman, Singapore, Kuwait, and Saudi Arabia. Accordingly, onion prices are expected to strengthen in these markets, which China will most likely take advantage of first.
For more information: east-fruit.com