Increased demand makes chilli prices hotter

Increased demand from North India coupled with speculative buying have pushed up chilli prices though harvesting has already picked up momentum in Andhra Pradesh. Average price has increased to Rs 33-34 a kg while this was Rs 29 couple of weeks back.

Major traders here said that although production has been good this season, supply to terminal markets has not picked up yet. They said the total production in the current season is estimated at 5.5 lakh tonne while Andhra Pradesh alone may produce 4 lakh tonne.

However, the total production may be lower by 35-40 per cent than last year. This has made the market slightly bullish on account of a shortfall in stock after the season and hence stocking of chilli has already picked up in upcountry markets.

Market sources said prices may fall by the next month as production would be at the peak level in Andhra Pradesh by next month.

There would be another setback to chilli production in this season since export market is not favourable as it was in last fiscal.

Indian chilly is being quoted around $ 75"�300 higher for a tonne at New York market and major producing countries like China, Pakistan, Mexico, and Peru are quoting much lower price tag than India. Indian parity in New York is $1,322 a tonne while China offers $ 1,250 and Pakistani Dundi cut is being offered at $ 1,000.

Oleoresin manufacturers are also interested in importing chilli from China as they quote $ 20 a kg of paprika of 1,00,000 CV color value. Indian quotations are higher by $6-8 and owing to this, more import of paprika grade is expected from China.

Mexico and Peru are also aggressive in global market and Mexico offers paprika at a price tag of $ 1,200"� 1,250 a tonne.

During 2004-2005, India exported 1,38,000 tonne of chilly valued at Rs 499.01 crore, a record. This aggregated 41 per cent of total export of spices and 23 per cent of the total income during last fiscal.

A prominent dealer here told Business Standard that export will not pick momentum this year as it did in the last fiscal since other countries offer chilly at much cheaper price tag .

Market will have a turning point next month as major producing centres, especially Guntur district in Andhra Pradesh will be active then.

Experts feel that although there would be a slight fall in price line during next month, it might pick up once the season is over, but the stock level will decide the price line.