Chilli prices down on good arrivals, low demand

Spot and futures prices of chilli are likely to fall during the week owing to ample arrivals amid poor retail and export demand, traders said on Wednesday.

Traders expect profit sales to continue in June on the National Commodity and Derivatives Exchange as prices have risen by almost 46 per cent since contract launch.

"The Guntur market re-opened after a gap of fifteen days leading to huge arrivals," said Vinaykanth of Guntur-based Vinay Spices.

In Guntur, trade was suspended from May 15 to June 5 due to soaring temperatures.

On Wednesday, around 50,000 bags (1 bag is 40-45 kg) arrived in Guntur, of which, 30,000 bags were from cold storages and 20,000 bags from farmers.

"Normally, during this period we have arrivals only from cold storages as the stock with the farmers would have been exhausted. But that did not happen this time," Vinaykanth said.

Vinaykanth said that most farmers, tempted by higher returns, hoarded stocks, which were now arriving in the spot markets.

Futures prices have dipped since Saturday due to profit sales and are down around 11 per cent since then. Low retail and export demand further pulled down prices.

"Prices scaled up before the markets closed on talk that ITC and Reliance were buying chillies in big amounts. However, there has been no confirmation of this yet," Harish Galipelli, analyst at Karvy Commodities, said.

Traders expect more profit sales by the end of the week.

"Apart from the high rise in prices another factor which is making traders book profits is the nearing of June expiry," another trader said.

June contract on NCDEX will expire June 20.

"Expiry would lead to traders taking delivery and dumping excess chilli in the spot markets," he said.

Traders said that there are around 7,00,000 bags (1 bag is 25 kg) in NCDEX warehouses.

"The difficult part here is that chillies from NCDEX warehouses are mainly for exports due to their bag size," Vinaykanth said.

Most export orders have been finalised and we have not got any fresh enquiries, he said.

In the spot market, traders expect prices to fall by another Rs 200-300 a quintal during the week.

Galipelli sees resistance for June chilli at Rs 4,700 a quintal and support at Rs 4,231.

At 1642 IST, June chilli contract was at Rs 4,588 a quintal, up 4.5 per cent from Tuesday.