Chilli prices to decline on increased stock position

The average price of chilli may decline below Rs 25 a kg, market experts said taking into account the recent supply trend.

Analysts told Business Standard that this is owing to the increased availability of chilli in Andhra Pradesh and the slashing of average price per kg to Rs 30, currently. It is also estimated that the market would witness a slowdown in prices as production season will be in full swing within next two-three weeks.

The increased stock position in cold storages has affected the price line and according to market sources, around 70 per cent of the storage space is full in the Guntur district of Andhra Pradesh. This has enhanced the supply to the domestic markets, which in turn has strongly capped the upward movement of the price line.

The daily arrival of chilli in Guntur area is around 65,000-75,000 bags, of which 90 per cent is from cold storages. There has been a temperory slowdown in supply of fresh chilli owing to sharp decline in production and the average daily arrival is to the tune of 5,000-6,000 bags.

It is estimated that production will be lower by 20-25 per cent and total harvest would be to the tune of 450,000 tonne. But the shortfall in production may not trigger an increase in prices as it does not affect the supply chain of chilli.

An exporter here said Business Standard that normally 25 per cent of the storage capacity is filled during this season, but this time there had been an increase in cold storage stock by almost 200 per cent.

Meanwhile, China and Pakistan have raised serious threat to India in the global market since they offer lower prices than India. Chinese Paprica type stemless, seedless, high colour chilli is available in the global market at the rate of $ 1200 a tonne.

A trader said that Chinese stuff is available at the same rate C&F Kochi also. The average per Kg domestic price for Paprica type chilli is Rs 55 while China offers chopped stemless, seedless variety at price tag of Rs 52.

He said that though India is not active in importing chilli from China the lower price tag might attract oleoresin manufacturers. Pakistan offers Dundicut variety [stemless] chilli at a price tag of $800 while the Indian quotation in NewYork market is above the level of $1225.

According to latest estimates China would have a better crop in this season and total production will be around 4.5 -5 lakh tonne. India's exposure to global market in the current fiscal is rather weak compared with the performance during last year.

During April-December 2005, 86,750 tonne chilli valued at Rs 298.10 crore was exported while this was 107,681 tonne valued at Rs 394.54 crore during the same period in 2004.

India suffered a drop of 19 per cent in quantity and 24 per cent in value during April-December 2005 period.