NCDEX drops onion futures plans

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 here.

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 a quintal, 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, said commission agents.

Onion prices are likely to drop as output is projected to go up by 14 per cent in 2007-08, with the area under onion crop likely to increase in the ongoing kharif season.