Chilli prices soar 5% on rising exports

Rising demand for exports coupled with depleting stocks are taking chilli prices to new highs. Since the beginning of this month, chilli prices in the spot market have surged by more than 5 per cent.

According to market sources, local demand from eastern and southern states have picked up after August 20 and demand from countries like Srilanka and Malaysia too has gone up.

Last week, spot price of Chilli rose to Rs 6,305 a quintal as against Rs 6,000 a quintal at the beginning of September. Bangladesh was the main importer of Indian chilli.

However, last week has seen a slight drop in demand from Bangladesh but demand from Srilanka has picked up reaching even 7,000 bags a day.

According to market sources, Indian chilli are carried to China via Malaysia and if this trend continues, the prices are expected to get firmer.

Floods in chilli-growing areas in China, the second largest producer after India, have damaged the crop and the country is facing a shortfall in chilli supply, sources said.

In July, India's total chilli exports stood at around 6 lakh bags, which rose to 6.5 lakh bags in August.

"At present 22 lakh bags of chilli are stocked in Guntur and 50 per cent of them is of superior quality while the rest is of average quality," said Ashok Dattani, a Mumbai-based trader.

"Demand has gone up despite the current season being not a peak demand period. Now, with demand rising, the stocks of superior quality will be consumed within two months," Dattani said.

This year, chilli production has dipped by almost half at 1.25 crore bags as against 2.6 crore bags last year. Market sources said the fall in output was due to the decline in acreage which dropped by 50 per cent.

Andhra Pradesh and Karnataka are the leading chilli- producing states in the country. Chilli production in Andhra dropped to 65 lakh bags this year as against 135 lakh bags last year. Similarly, Karnataka produced 30 lakh bags of chilli compared with 48 lakh bags last year.