Volatility grips chilli spot, futures

May 2006 has, thus far, remained volatile for red chilli. The June futures contract rose 13 per cent in the first fortnight to Rs 5,878 a quintal on the National Commodity & Derivatives Exchange Ltd (NCDEX).

Thereafter, profit-booking settled the highly volatile spice variety at Rs 5,272 a quintal on Saturday. Again, fresh booking by renewed funds today lifted its price marginally up to Rs 5,336 a quintal.

The spot price of chilly for Guntur delivery witnessed a volatility of 6 per cent to touch the lower limit of Rs 5,121 a quintal today.

The upward momentum was initially attributed to the about 40 per cent decline in overall production this year due to heavy, non-seasonal rains in major chilli-producing centres, consequent upon which small crops could not come up at all, resulting in a crop loss of about 40-45 per cent.

This price rise was anticipated as there was production shortfall this year, said Yogesh Mehta of SpicExim.

Commodities exchanges are also helping traders hedge their risk and analyse the price variations for the future. Hence, the futures prices of chilly depend on the movement on the exchanges as well, Mehta said.

He further said four major chilly-growing states "� Karnataka, Maharashtra, Madhya Pradesh and Andhra Pradesh "� are going to witness an accumulative production loss of around 40-50 per cent this year.

Karnataka and Madhya Pradesh will have hardly 50 per cent crop this year, while Maharashtra is expecting only 30 per cent of output.

Three major suppliers of Andhra Pradesh "� Guntur, Khamam and Varangal "� are anticipating a production of 2,85,000 tonne against the normal production of 3,75,000 tonne. Last year, these three areas, which are major export centres, contributed about 4,95,000 tonne.

While no official production figures are available so far, industry estimates put the country's total production of chilly this year, under normal monsoons, at 9,00,000 tonne compared with the estimated 4,50,000 tonne due to 50 per cent crop losses.

Huge inventories piled up for the next season were also damaged to finally settle at 45,000 tonne, which is just half of the opening stock under normal monsoons.

The domestic consumption of chilly is around 3,90,000 tonne with retailers buying about 1,20,000 tonne and stockists about 1,80,000 tonne. Stocks of around 90,000 tonne are sold by farmers.