Firm output cues weigh down chilli

The domestic chilli market is reeling under a bearish phase following good rains and early sowing, which is likely to boost the output. Besides, a continuing sluggish demand in the domestic and the overseas markets is further adding to the downturn.

Sowing in major chilli-growing states such as Karnataka, Andhra Pradesh and Madhya Pradesh has already started on the back of good rains.

According to market sources, the acreage is expected to go up by 20-25 per cent. "As farmers have fetched good rates, acreage under chilli could go up," said Nalini Rao, analyst at Angel Commodities.

In 2006-07, the country produced over 230 lakh bags (each of 35 kg) against the previous year's 130 lakh bags. With the rising acreage, the crop for 2007-08 is anticipated to see a jump of 30 per cent, close to 300 lakh bags, said analysts.

In Madhya Pradesh alone (where farmers got the best price last year, owing to an early crop arrival), acreage may go up by 40 per cent. This year, the sowing has begun earlier.

The crop, which normally arrives during January-February, is expected to hit the market by November-December, sources added.

Meanwhile, the reports from China, suggesting a good chilli crop this season, are expected to take away India's share in the overseas market causing. China was a big market for the Indian chilli last year as floods hit the crop there. The Chinese crop is expected to hit the market by August-September.

On Tuesday, Guntur witnessed an arrival of 25,000 bags from cold storage. However, market sources said that less than 5,000 bags could be traded. Stocks in cold storages across Andhra Pradesh have piled up to around 75 lakh bags. Traders believe that gradually the market will tumble to Rs 3,500 a quintal.

On the National Commodity and Derivatives Exchange (NCDEX), the near-month chilli contract closed flat at Rs 4,437 a quintal against the previous close of Rs 4,436 a quintal.