Rain holds key to chilli as export demand slows

M.R. Subramani Updated - March 12, 2018 at 11:27 AM.

chilli

Rain holds the key to chilli prices that have dropped by over Rs 100 a quintal in the last one month.

Chilli 334 grade prices are currently quoting at Rs 8,896.15 a quintal against Rs 9,002 on September 14. In the futures market, while October contracts gained Rs 86 on Monday at Rs 8,932 a quintal, other contracts dropped. November contracts closed at Rs 8,460 and December at Rs 8,120.

“If it rains before Diwali, then chilli prices will drop. If it doesn't then, prices will rule steady,” said Mr Alapati Srinivasa Rao, a trader from Guntur.

Prices are expected to drop because the area under chilli is up 30 per cent compared with last year, said Mr Rao. But the Andhra Pradesh Government data show that the area is down by 6,000 hectares to 1.46 lakh hectares compared with last year.

“No, area cannot be lower. Paddy farmers have shifted to chilli and therefore, the area under chilli is higher,” said Mr Rao.

Andhra Pradesh accounts for 7.5 lakh tonnes of the 13.5 lakh tonnes chilli produced in the country.

According to him, Chilli 334 grade is ruling between Rs 8,500 and Rs 9,500 a quintal based on quality, while the Teja variety is quoting at Rs 7,500-8,700.

“If rains, as is being projected, come this week, then after Diwali the current year crop's price could drop to as low as Rs 6,000. Next year's crop could be even lower,” he said.

The other reason for the bearish outlook is that exports have slowed. “Exports to Malaysia, Nepal, Pakistan and Sri Lanka continue but at a lower pace,” said Mr Rao.

According to the Spices Board, chilli exports have dropped 39 per cent between April and August this year.

Pakistan was reported to be scouting for Indian chilli a month ago but now it has slowed its purchase, according to Karvy Comtrade.

The broking agency, too, has come out with a bearish outlook for chilli in the background of new crop in Madhya Pradesh weighing on the market. “Moreover, those holding long positions are selling,” it said in its report.

With carryover stocks being ample, things aren't looking hot any more for chilli.

Published on October 17, 2011 16:23