The chilli market in Guntur in southern Andhra Pradesh state, Asias largest spot market for the spice, is seeing daily arrivals of 20,000 bags of 40 kg each on top of 4.5 million bags stored in the regions warehouses, they said.
There are no fresh export orders and traders already have enough stock, said Alepata Srinivas Rao, a Guntur trader. Traders dont have space to store new output. All warehouses in the area are filled with this years bumper crop.
The fall over the last two weeks comes after spike in chilli prices in March on sustained exporter buying to meet demand from Sri Lanka, Indonesia, Pakistan and Malaysia on the back of crop damage in China. Prices rose sharply on export boom. But now picture became clear - there is more output than demand, Rao said.
The June contract on the National Commodity and Derivatives Exchange was down 1.2% at Rs 4,815 per 100 kg, falling more than 22% since April 10. The July contract, too, has fallen by a similar margin during this period.
The spot prices, too, have moved in tandem. LCA 334, the most traded variety, fell by Rs 736.35 to Rs 4,432.75 per 100 kg in the Guntur spot market.
Prices are falling as the re-exporters from Malaysia are facing problems in exporting chillies to Thailand, said Saravanan Lokasundaram of Greencrop Merchandise, a Chennai based exporter.