Prices of onion fell by Tk 8.0-Tk 12 per kilogram at wholesale level in the city markets on Sunday following a reduction in minimum export price (MEP) of the spice by India.
According to Indian media reports, the country slashed MEP of the key spice by US$ 150 per tonne to $ 700 from $ 850 a tonne which came into effect from Saturday.
The Press Trust of India (PTI), quoting the commerce ministry, reported that export of onion shall be allowed only on Letter of Credit (LC) subject to a Minimum Export Price (MEP) of US$ 700 per tonne till February.
The commerce ministry of India fixed the new MEP following rising supply of onion in the domestic market, according to the PTI report.
The Times of India said onion price witnessed an 11 per cent plunge last week as onion was sold at Tk 27.50 a kg at Lasalgaon wholesale in Maharashtra of India, the biggest onion market in the world.
The prices of the item might decline further, it said.
The wholesale prices of onion, however, witnessed up to a Tk 12 decline per kg in Dhaka while retail prices showed a slight decline on Sunday.
Imported onion was sold at Tk 48-Tk 51 a kg at Shyambazar wholesale in the city on the day --- a Tk 9.0-Tk 10 decline.
Newly harvested domestic onion was sold at Tk 40-Tk 52 a kg based on its quality --- a Tk 8.0-Tk 12 drop in a day.
Narayan Chandra Saha, Shaymbazar-based importer, told the FE that prices of onion started declining as traders are releasing 'older stocks' in fear of further plunge following the reduction in its MEP by India.
He said import of onion from India had been declining sharply since November last when the country fixed MEP of onion at $ 850 a tonne.
He said opening of L/Cs will go up following the India's latest move for reduction in MEP of onion.
"Despite reduction in MEP, import costs will not be less than Tk 62 a kg due to the latest MEP and depreciation of BDT against greenback," he said.
He said local onion will lead the market in the coming days as the costs of such varieties will be lesser compared to that of imported one.
However, prices of onion at retail level showed a slight decline but were still much higher as imported and local varieties were traded at Tk 65-Tk 80 a kg in the city markets.
Onion is now 166-188 per cent pricier than that of a year ago in Dhaka, according to the Trading Corporation of Bangladesh (TCB).
Onion prices hit a record of Tk 110-Tk 130 a kg during the November-December period in the country following high import costs.
Md Abdul Aziz, another onion trader at Shyambazar, told the FE that retail prices of onion would also come down within few days after older stocks of the vendors and grocers run out.
Bangladesh produces 1.8 million tonnes of onion annually against its demand for 2.2 million tonnes, according to the Bangladesh Bureau of Statistics and the Ministry of Commerce.
The country imports 0.7-0.95 million tonnes of onion annually, mostly from India.
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