Holidays may keep chilli prices steady

Near-month chilli contract on the National Commodity and Derivatives Exchange (NCDEX) is seen declining this week on lack of price signals from the spot markets, traders said.

In the main cash market of Guntur in Andhra Pradesh, prices are seen almost flat as the benchmark trading centre will remain closed from Thursday, hence providing fewer cues to futures.

Ahead of the weekend, Guntur market will remain closed on Thursday for Jagjivan Ram Jayanti, and the following day on account of Good Friday.

Analysts recommended going short on chilli contracts for the week.

"Prices will be steady since there will be only one trading session left (Wednesday) before Guntur market closes for a four-day leave," Naresh Sharma, proprietor of Guntur-based Mirnal Exports said.

Sharma expects prices of benchmark LC 334 variety chilli to hover around today's levels of Rs 5,100-Rs 5,400 a quintal.

Arrivals are also not likely to increase, and traders expect around 60,000-70,000 bags (1 bag=40-45 kg) to come in the market on Wednesday. Traders said prices may inch up a bit in the spot markets if arrivals fall drastically, but that may not happen as only one working day was left in the week. "Demand from both exporters and domestic processors are steady," Sharma said.

"Apart from lack of cues from spot markets, the contracts are seen down on technical selling," Safdar Golwala, analyst at Emkay Commotrade said, adding that prices were in the over-bought zone, and a correction was imminent. Last week, the April contract rose 4.3 per cent, while posting around 28 per cent gains in March from a month earlier.

The April contract is likely to fall towards Rs 5,350 a quintal and then Rs 5,300, Kaushal Shah, analyst, Motilal Oswal Commodities said.

At 2:44 PM, the April contract was Rs 24 higher from close Monday at Rs 5,420 a quintal. The June contract is seen in the Rs 5,500-Rs 5,800 a quintal range, Golwala of Emkay said.

The contract was trading at Rs 5,668 a quintal, up Rs 31.