Chilli Guntur LCA 334 (pala) futures prices are expected to remain bullish in the short term on strong export demand and tight supply of best quality stocks.
Chilli June 2008 futures prices on NCDEX platform rose from Rs 4,200 to 5,300 levels in the span of two months on supply concern of best quality stock in the market. Chilli futures June contract was launched in the month of February 2008. Since the beginning of the contract prices made its journey in northward direction on taking cues from the fundamental factors.
The major factors supported the rally were reports of heavy crop damage during peak harvesting and drying times in coastal belt of Andhra Pradesh which is the major chilli producing region in India.
?The projections of declined production from 14 lakh tonne to 11.5 lakh tonne triggered the rally in the market. In addition to the washout of the crop in field, the left over stock on the bunds turned whitish on pest attach due to presence of high moisture content for a prolonged period and strong export demand from Pakistan also supported the bull run,? an analyst with Karvy Comtrade said.
To this bullish sentiment recent fire mishap in Asia?s biggest chilli market which is located in Guntur added fuel. In this accident, total crop lost is nearly 3 lakh bags, each bag contains 45 kgs.
These factors forced the participants to speculate on this commodity and resulted in higher volumes in the market. On request from farmers and traders the government officials has taken a decision to reopen the spot market Monday onwards. This may give fresh direction in the market, and prices are expected to resume back its bullish trend after considering the present situation in chilli supply and demand dynamics, sources said.