Chilli prices are likely to trade weak as arrivals trickle in and demand remains sluggish. Lower exports in the current FY due to higher domestic prices is adding to the pressure. Traders and analysts see the market declining further on the back of higher arrivals and lower demand.
?The market is likely to decline on lower demand. Arrivals from Madhya Pradesh has started coming to the market in good volumes and exports are lower than last year,? Faiyaz Hudani at Kotak Commodity Services said. Higher exports always translate into higher domestic prices due to the lesser availability of the commodity. During the first six months, volume of chilli exports is lower by 35%, while value is up by 5%. During the last FY, a total quantity of 2,40,000 tonne of chilli valued at R1,535.54 crore has been exported against 2,04,000 tonne valued at R1291.73 crore of 2009-10.
?Prices at the moment are higher and affecting consumption. Stocks are not that high at around 35-40 lakh bags,? Nalini Rao, research analyst at Angel Commodities said. ? Prices are likely to come down due to reports that rains are back in Andhra Pradesh. Lower rainfall during October was a matter of concern,? she added.
Chilli sowing is lower in Andhra Pradesh by 4% when compared to last year and 10% when compared to the normal, Faiyaz Hudani said. Chilli production averages around 13.5 lakh tonne annually and Andhra Pradesh accounts for over 7.5 lakh tonne.
?This year there is 40 % reduction in rainfall and 15 to 20% fall in yield is expected because of the drought. As of now the productivity expected is 18 -20 quintals per acre against a normal yield of 22 -24 quintals,? P Raghu Ram, of Agricultural market intelligence centre (AMIC) of Acharya N G Ranga Agricultural University (ANGRAU) said.
