Chilli seen firm on delayed arrivals

Chilli futures on the National Commodity and Derivatives Exchange (NCDEX)are expected to be mostly firm in the next one week on concerns that rain in Guntur, the key-producing region, would damage the crop and further delay fresh arrivals, analysts said.

However, the contract may face bouts of profit-booking at higher levels on lack of stock in exchange warehouses and ahead of its expiry on February 20, Faiyaz Hudani, research analyst, Kotak Commodities, said.

Spot chilli prices may witness a rise of Rs 2 a kg on low availability of good quality stock, traders said.

Despite higher acreage of over 15 per cent in Guntur, low yields due to cold and wet weather have led to 2008 crop estimate falling to 9-10 million bags (1 bag=40-45 kg) from 10.5-11.25 million bags forecast earlier. In 2007, the region's crop was 10 million bags.

Futures prices are likely to remain bullish in the coming week tracking the delay in arrivals in spot market, analysts said. Analysts feel that lack of stock in exchange warehouses have ensured that the rally will be tempered with profit sales, as there is no physical delivery possible for this month's contract.

Most traders are eyeing March as a key contract when physical deliveries may take place, as vagaries of the weather in Guntur are likely to subside and good quality fresh crop may hit the market early next month.