Chilli prices seen weak on higher arrivals

Chilli futures on the National Commodity and Derivatives Exchange are likely to move sideways with a negative bias in the week ahead, amid expectation of a rise in arrivals and moderate local demand, analysts and traders said on Tuesday.

In the spot market, the prices are likely to remain steady at the current level of Rs 30-36 a kg with a weak bias, they said.

The spot market may show a slightly weak trend as new crop arrivals are expected to rise significantly at Guntur, said Hari Om Maheshwari, a local trader.

At present, arrivals in the Guntur market stand at 20,000-25,000 bags (1 bag=40-45 kg) daily. Traders expect it to increase to around 35,000 bags next week. They expect output this year to rise on the back of about 25 per cent increase in acreage. This is likely to put pressure on the prices.

The spot prices might fall Rs 5-10 a kg from the current levels in the coming few days.

"However, a major downside will be restricted as arrivals are still subdued because chilli drying is taking longer than required time due to cloudy weather conditions in Andhra Pradesh," said Vinaykanth, proprietor of Vinay Spices, Guntur.

Futures are likely to stay rangebound with a negative bias in the week ahead on firm technical factors, analysts said. The most liquid February contract is seen in the range Rs 3,598-3,762 a quintal band.

Although arrivals are expected to be high and demand is steady, the front-month contract is likely to stabilise around its initial support level of Rs 3,600 a quintal. On the upper side, it may face initial resistance level at Rs 3,750, analysts said.

Breaching of any one of the levels will result in a sharp movement in the prices, they said.

Exports are also expected to rise in March and April, analysts said.