Chilli down on weak demand

Weak domestic and exports demand pulled down chilli spot and futures prices by 10 per cent and 7.5 per cent last week.

Commodities analysts and traders said the downward trend was unlikely to be reversed in the next few days. "Since March-end, demand from countries like China, Malaysia and Bangladesh has been going down," said Ashok Dattani, a Mumbai-based chilli trader.

The spot prices, which were ruling in the range of Rs 3,500-4,600 a quintal a week ago, came down to Rs 3,200-4,100 a quintal. In futures markets, the June contract fell below Rs 5,300 a quintal from Rs 5,736 a quintal during the same period.

An analyst with Angel Commodities said lack of demand from Bangladesh was because of new crop arrivals there. She added demand might further weaken, and thereby did not rule out further slides in the prices.

Sources said there could be some technical rally catapulting the prices, but they would not stay for long. According to Dattani, "After some time, we can expect market to become stable, and chances of reaching the levels of Rs 30-35 a kg are now on the cards." Market experts, however, did not decline the possibility of exports demand making a come back.

Regular arrivals and piling up of stocks in cold storages are the other contributing factors in stoking bearish sentiments in the entire chilli market. Today, 70,000 bags (each of 40 kg) of chilli arrived in the Guntur market. According to market estimates, there are already around 55-60 lakh bags stored in cold storages.

Chilli futures touched the Rs 6,000 a quintal mark a few weeks back on the back of strong export demand and reports of low estimated output.