Chilli has become a hot commodity with prices increasing by 15 per cent in the last fortnight. In fact, chilli futures hit the Rs 6,200-mark on Thursday before paring gains.
Export demand is the primary mover of the spice besides deficit monsoon that is providing an added thrust.
Export demand have emanated from Bangladesh, Pakistan, Malaysia and Sri Lanka. Besides, China is reported to have bought some 50,000 tonnes of the premium ‘Teja’ variety during April-June.
Exports have increased almost 50 per cent during April. According to Spices Board data, chilli exports in April more than doubled to 30,000 tonnes from around 12,093 tonnes.
The deficit monsoon has given rise to fears, mainly on account of lower water storage level in the reservoirs. Up to July 31, monsoon deficit has been pegged at 19 per cent.
Spot prices gained sharply in Guntur market on Thursday despite higher arrivals. The modal price or the rate at which most trades took place for the Red variety increased to Rs 4,200 a quintal from Rs 3,700 on Wednesday. The Red New variety was stable at Rs 4,200, while the Red Top variety was up Rs 100 at Rs 7,700. The Sannalu variety increased by Rs 200 to Rs 6,300.
On the National Commodities and Derivatives Exchange, October contracts ended up by Rs 90 at Rs 6,188, while September contracts were up Rs 40 at Rs 5,900. August series were up at Rs 5,690.
A question mark over the prospects of the next crop is likely to keep prices firm.