Chilli futures may remain range-bound

Spot prices in the key market of Guntur, Andhra Pradesh, are likely to continue to be firm

Chilli futures on National Commodity and Derivatives Exchange are likely to be range-bound this week, pressured by expected increase in arrivals ahead of February delivery, analysts said.

Spot prices in the key market of Guntur, Andhra Pradesh, are likely to continue to be firm on falling warehouse stocks, and good demand, local traders said. This will also provide some support to futures prices, they said.

SPOT
In Guntur spot market next week, chilli is likely to be steady-to-firm at around Rs 35-42 per 1 kg, up from Monday's trading range of Rs 34-38, traders said.

"Demand from across the country remains very good, along with fall in local warehouse stocks," Jugraj, a Guntur-based trader, said.

Guntur warehouse stocks are expected to have fallen below 1 mln bags (1 bag=45-50 kg) with just 400,000 bags of high quality produce still left in warehouses.

Exports to Bangladesh are also providing an upward bias to prices, analysts said.

New crop arrivals are likely to reach the market only post-Sankranti on January 14, pushing spot chilli prices higher. On Monday, arrivals were at 35,000 bags, up from last week's average arrival of around 25,000 bags a day, Jugraj said.

Indore chilli prices are likely to stay steady despite good demand from across the country as weekly arrivals have risen by 10,000 bags to 110,000 bags, said Kishore Rathod, proprietor of Indore-based Rathod Traders. Indore spot chilli was steady at around 38 rupees per 1 kg on Monday, mostly unchanged from last week.

FUTURES
On NCDEX, February contract is likely to be mostly range-bound with a slight negative bias in the week ahead on expected rise in supplies ahead of delivery in February, analysts said.

However, the downside will be limited by good spot demand, and expected increase in exports, analysts said.

"Globally, stocks of chilli are extremely low, which augurs well for exports from India. Demand from Bangladesh remains steady, and exporters expect demand from Sri Lanka and Malaysia to surge around February-March," Yogendra Singh, research analyst, Religare Commodities said.

Prices are also susceptible to sharp increases if there are rains in Andhra Pradesh, which will seriously affect crop quality as it is close to harvest period, analysts said.

Analysts expect February contract to have strong resistance at Rs 4,050 per 100 kg, and support at Rs 3,725. At 1:41 pm, February contract was at Rs 3,824 per 100 kg, down Rs 40 or 1.04 per cent from Saturday's close.