Chilli dips 9% to Rs 6266

Chilli prices are on the decline. After hitting all-time highs of above Rs 7,000 a quintal last month, the prices have continuously declined in the last fortnight on the back of less demand in the foreign as well as the domestic markets.

Spot prices on the National Commodity and Derivatives Exchange (NCDEX) dropped by over 9 per cent from Rs 6,930 a quintal in the beginning of the month to Rs 6,266 on Wednesday.

The trend is bearish on the futures markets as well with the prices of November and December contracts falling by more than Rs 940 and Rs 798 a quintal respectively.

"There is no demand from Bangladesh and Sri Lanka, which has led to a correction in the overheated market," said Ashok Dattani, a Mumbai-based chilli trader.

He added that buyers, especially from Bangladesh, are expected to come back to the market by the end of the month and prices may see some upward rally.

Normally, Bangladesh and Sri Lanka each account for 3,000 to 5,000 bags (each bag equals 40 kg) a day. The domestic demand, which had picked up since mid-August, has substantially declined, strengthening the bearish sentiments.

"At present, the stock available in Guntur is around 13 to 14 lakh bags. Of this, the quantity of superior quality chilli stands at 4 lakh bags," added Dattani.

However, the fall on the futures markets is irrelevant, he said, adding, "One of the reasons for it could be a large amount of inferior chilli in the warehouses," he said.

This year, chilli production has fallen almost by half from around 2.6 crore bags last year to 1.25 crore bags this year. Market sources attributed the fall to a drop in acreage by 50 per cent.

Last year, India had an overproduction of 8 lakh tonne followed by a low demand. Consequently, the prices had declined to as low as Rs 1,500 a quintal.