Chilli futures likely to remain ranged

MARKET OUTLOOK

Chilli futures on the National Commodity and Derivatives Exchange are likely to be range-bound this week amid thin volumes, analysts said. Spot prices in key market of Guntur in Andhra Pradesh are likely to remain stable on good domestic demand, and steady exports to Bangladesh, traders said.

SPOT In Guntur spot market next week, chilli is likely to be mostly steady at Rs 32-39 per 1 kg supported by lower availability of good quality stocks, but pressured by new crop arrivals expected after January 14, traders said.

Today, Guntur chilli prices were steady at Rs 32-38 per 1 kg.

Arrivals were at 40,000 bags today, up from last week's average arrival of around 30,000 bags a day, traders said.

Most demand is from across the country with small amounts being purchased for exports to Bangladesh, said Hari Om Maheshwari, a Guntur-based trader.

"There is good demand for high quality chilli and arrivals of this quality are very low, which has helped prop up prices in spot and futures despite impending new crop arrivals," said Faiyaz Hudani, research analyst, Kotak Commodities.

Indore chilli prices are likely to stay steady on good demand from across the country despite weekly arrivals rising above 100,000 bags, said Vinod Jain, a local trader.

Indore spot chilli was steady at 37-38 rupees per 1 kg today, unchanged from last week.

FUTURES
On NCDEX, the February contract is likely to be mostly range-bound with strong support at Rs 3,700 per 100 kg, and resistance at Rs 3,900, Hudani said.

Lack of stocks in NCDEX warehouses, and very thin volumes are weighing down on prices.

However, Maheshwari expects prices to sustain until March on the view that global shortage of chilli will boost export demand, providing support to prices.

In 2007-08 (Apr-Mar), chilli export is expected to touch 200,000 tonnes on good demand from Malaysia, Sri Lanka, the US, and Bangladesh, according to the Associated Chambers of Commerce and Industry of India.

The association's export target is much higher than government's target of 135,000 tonnes. At 1.25 pm, the February contract was at Rs 3,785 per 100 kg, up Rs 8, or 0.21 per cent, from Monday.