Commodity spikes

Chilli: Glut to soften prices

Rising arrivals despite subdued demand is likely dampen futures as well as spot prices of chilli next week.

Last week witnessed a decline in the near month contract with prices falling from Rs 3,903 a quintal to Rs 3,737 a quintal. The first two trading sessions of last week saw futures market firming up due to Pongal and Makar Sankrant which brought supply constraints.

However, in the last four days, the market went into reverse gear. On Saturday, the Guntur market - a major trading hub - got a total of 45,000 bags (40 kg each), said traders.

According to commodity analysts, chilli is expected to trade low next week as more supplies will flood the markets. They said the commodity may drop to around Rs 3,500 a quintal in the futures market taking cues from the weakening spot prices.

According to market sources, spot rates have dipped to Rs 3,200-3,500 a quintal in mandis. The country is expecting 2.5-2.7 crore chilli bags this year while last year's figure stood at 2.3-2.4 crore bags.

For the next week, the February contract is being seen to have support at Rs 3,650 a quintal. However, analysts added that the support may not sustain for long and the commodity could decline further.

Jeera: In bear grip

The jeera market, which witnessed a rally last fortnight, started showing signs of correction in the latter part of the last week. Stable demand, increase in arrivals at Unjha (a jeera trading hub in Gujarat) and expectations of jeera production rising 20-25 per cent, stoked bearish sentiments.

Though the picture is not clear yet, market estimates suggest that the country could see an output of 18 lakh bags (55 kg each) this year.

"There is selling pressure in the market which is expected to continue next week, too," said Faiyaz Hudani, commodity analyst at Kotak Commodities.

By mid February, arrivals will gain momentum which could further bring down prices. Arrivals in Unjha on Saturday were to the tune of 3,000 bags which, until recently, were hovering around 2,000-3,000 bags a day.

The near month futures contract on the National Commodity and Derivatives Exchange fell by Rs 570 a quintal last week from a high of Rs 11,816 to Rs 11,335.

According to analysts, Rs 11,200 a quintal offers a good support next week for jeera. Last season saw jeera Rs 14,000 a quintal levels as rain in parts of Rajasthan and Gujarat destroyed the standing crop.