Chilli prices seen firm on festive demand

Chilli prices are likely to remain firm with an upward bias at least until Diwali in the first week of November, analysts and traders said. Unconfirmed reports of possible crop damage in Andhra Pradesh due to floods are also pushing prices up, they said.

"We are seeing a good festive demand. Prices are likely to remain stable with an upward trend until Diwali," said Vinaykanth of Guntur-based Vinay Spices. Moreover, arrivals in the mandis are low as most farmers are busy replanting the crop lost due to the Andhra Pradesh floods, Vinaykanth said.

Unconfirmed reports suggest about 10-20 per cent of chilli crop is likely to be damaged in the key chilli growing regions of Krishna, Khammam, and Warangal in Andhra Pradesh, traders said.

"Also, after the floods, farmers have been encouraged to sow the varieties such as 273 and No 5, which are hybrid seeds instead of variety 334," Vinaykanth said.

Guntur market yard mainly sees the arrivals of AC and non-AC stock or 'common varieties'. AC stock is the chilli that is kept in cold warehouses. The common varieties basket includes 334, 231, 273, Roshini Teja, No. 5, Guntur Sannalu, among others.

"Variety 334 also known as default quality is likely to remain scarce owing to the fall in sowing, which is likely to fuel prices upwards," Vinaykanth said.

Moreover, the crop yield that is due in the next season (January) is likely to remain low owing to the flood damage, said Jagan Mohan, a Guntur-based exporter.

"Reports also suggest that there might be a delay in the crop coming next season," said Naresh Sharma, a Guntur-based trader.

In the year starting November, chilli crop is estimated at 12 million bags, down from last year's bumper 39.5 million bags (1 bag=40-45 kg) because farmers switched to other crops on the advise of the Andhra government."Almost 30-35 per cent of the stock in cold storage's have been sold out," said Mohan, adding, "there are almost 50 lakh bags (1 bag=40-45 kgs) lying in the warehouses."

Guntur is also witnessing a good enquiry for buying from the small-time wholesalers, an analyst at Kochi-based Peninsular Comex Services said.

"Most of the commodity stored in the warehouses of wholesalers have decreased, which has encouraged fresh buying," the analyst said.

Most wholesalers buy the spice and store in smaller warehouses, which acts like a 'mini terminal' for delivery.

"Overall arrivals have been lower from the week earlier and the movement in prices is more of wait and watch situation," Vinaykanth said.