Chilli prices to remain firm on export demand

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Kochi: Shortfall in Chinese chilli crop is likely to add fuel to the domestic markets and help in better exports. Traders said Chilli prices in India are already expected to cross the previous high and touch record levels because of shortfall in production and lower inventory.

With some traders getting export enquires even from China and Vietnam, prices locally could skyrocket, they added. China is a major producer of chilli and exports oleoresins from the paprika variety even to India.

Indian chilli exports had fallen in the first half of the current fiscal due to the high domestic prices. China had displaced India in the Pakistan market and in the first half of 2009-10, Indian chilli exports to Pakistan was nil as against 22,000 tonne during the first half of 2008-09.

Chilli, which contributed 40% volume of India's 470,520 tonne spices exports during 2008-09, has also been weighed down by global economic recession, sources said.

Export of chilli during April-September 2009 is estimated to be 82,000 tonne valued at Rs 510.08 crore as against 109,000 tonne valued at Rs 581.17 crore of last year.

Exports have decreased by 25% in volume and 12% in value for the first half of the current fiscal.

“If exports increase, availability of chilli in Indian markets could further fall, adding to the firmness. There are enquiries from China for Indian chilli,” P Nandakumar, a trade consultant told FE.

“Chilli stocks are on the lower side at the major trading centre of Guntur and reports of lower crop in 2009-10 will add to the rally,” Faiyaz Hudani at Kotak Commodity Services told FE. Major producing states like Andhra , Karnataka and Maharashtra received heavy rains earlier this month damaging some stocks, he added.

Farming area has come down due to lesser rains in the producing region and production could be lower as 25-30% from the 2008-09 crop, Faiyaz Hudani said. India is major producer and consumer of chilli in the world producing around 12-13 lakh tonne of chilli from around 6-7 lakh hectares.