Stockists enter the chilli market on higher-than-expected crop loss.
Spot chilli prices in Guntur on Monday surged nearly 22 per cent as turmeric stockists entered the market on higher-than-expected loss in the crop, traders and dealers said.
Most traders believe though the crop loss is substantial, the spurt in chilli prices on Monday and in the last couple of sessions is mainly due to speculative purchases by traders, who were active in turmeric last year.
Spot chilli prices of the pala variety rose to Rs 7,200-7,500 a quintal, compared with Rs 5,800-6,050 on Friday. The sanam variety quoted at Rs 7,600-7,900 against Rs 6,200-6,300.
So far in December, spot prices of the commodity have risen almost 50 per cent, according to the National Commodity and Derivatives Exchange (NCDEX) data.
Taking a cue, chilli futures also hit the four per cent upper circuit on Monday. In December alone, futures prices on NCDEX rose a whopping 66 per cent.
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“I agree, crop has been hit hard. But we are observing that prices are up mainly due to shift in speculative interest of turmeric traders,” a Guntur-based spices exporter said.
Vinaykanth Chawda, proprietor of Vinay Spices, said turmeric output this year would be better, while chilli production could fall 35-40 per cent, against the previous estimate of 25 per cent fall.
Vinod Jain, proprietor of Indore-based Trimurthi Traders said, “The trend will continue for some more time, but prices will fall sharply from the middle of the month.”
Andhra Pradesh’s total chilli crop was likely to be down 40 per cent from 12 million bags (1bag = 45 kg) last year, Kilari Rosaiah, president, Guntur Chilli Traders Association said.
“Fresh arrivals are expected to gain pace only by the start of March, hence spot prices of the red spice may rise another Rs 1,500 (per quintal) in the coming days,” he added.
In Indore, spot prices rose Rs 500-600 at Rs 6,350-6,450 a quintal.
Also, sentiment for chilli was bullish as exports were rising consistently, traders said.
India’s chilli exports in April-November rose 26 per cent year-on-year to 166,000 tonnes, according to the Spices Board of India. Export earnings from chilli stood at Rs 1,020 crore during the period.