Potato prices down despite crop loss

Potato prices in the spot market have come down 25-30 per cent in the last two weeks despite fears of crop damage owing to unseasonal rains.

An estimated 10 per cent crop loss because of adverse weather conditions in potato producing areas of Uttar Pradesh and West Bengal helped the prices move up to Rs 550-Rs 650 a quintal level during mid-March. This was complemented by low arrivals due to rains and rising demand from cold storages. However, reduced demands from cold storages along with higher supply brought down prices to Rs 375-500 levels.

Due to unseasonal rains, the earlier production estimate of around 28 million tonne is unlikely to be achieved. But analysts see no upward pressure on prices even with some damage to crop, as consumption demand will comfortably be met.

"As the domestic demand is only 25 million tonne, any decline in production from the initial estimates is unlikely to have a bearing on the prices. The recent decline in the prices is a healthy correction after an unexpected rally," said an analyst with Karvy Commodities. "The cold storage capacity has been utilised, and there is regular supply in mandis. As the temperature is rising, it is feared the produce outside the storage getting spoiled. The surplus outside storage is being traded at discounted rates", said Trilok Chand Sharma, president of Potato and Onion Merchants Association.

The futures price of potato has also discounted all fears of crop damage. At the National Commodities and Derivatives Exchange (NCDEX), April futures have slipped from Rs 664 to Rs 594 a quintal in the month.