Chilli seen firm on crop damage news

Domestic spot and futures prices of chilli are likely to be firm during the week to Tuesday on poor arrivals in the physical markets, traders said. Arrivals in Guntur - the country's spice hub in Andhra Pradesh - are likely to be disrupted due to rains early this week.

"The rains that started late Sunday (in Guntur) have damaged crops and hence arrivals from farms to mandis (wholesale market) would get affected," said Vinaykanth of Guntur-based Vinay Spices.

Traders said there were reports that around 5-10 per cent of the crop - standing and stored in warehouses - have been damaged.

"Till the weather does not clear up here, supply will continue to be hit and hence prices could shoot up," said Jagan Mohan, a Guntur-based exporter.

Around 50,000 bags arrived in the spot markets today, down 50 per cent from last week.

Prices of good quality chilli are likely to hover around Rs 3,500-4,000 per 100 kg, while the moist variety is seen at Rs 3,000-3,500.

However, traders said no fresh export deals were being inked as current prices were too high. Chilli prices in Indore are also seen positive on restricted supply.

"The arrival season in Madhya Pradesh is coming to an end, and barely 250 bags (1 bag=12 kg) are coming in...We are waiting for the crop from Andhra Pradesh," said Kishore Rathod, trader with Rathod Traders, Indore. He expects prices to range at Rs 4,000-4,200 per 100 kg.

Andhra Pradesh, Madhya Pradesh and Karnataka are India's leading chilli producers.

The May contract on the National Commodity and Derivatives Exchange is seen tracking the trend in spot during the coming week, said analysts.

On Monday, the contract gained Rs 394 per 100 kg on reports of crop damage.

"Since prices on the NCDEX are more than spot, traders are buying in spot and selling in futures to get better profits," said Jagan Mohan.

However, Vinayak N V of Karvy Commodities said there could be some profit sales, which could marginally depress prices.

"The fall in prices would only be a temporary phenomenon," Vinayak said.

The May contract is likely to see resistance at Rs 5,030 per 100 kg, while support is seen at Rs 4,600.

May chilli today closed at Rs 4,806 per 100 kg, down Rs 88 from Monday.