Prices likely to decline by 17%

The chilli market has entered a bearish phase and marketmen expect a further drop in the prices as arrivals are likely to peak in the coming months.

According to commodity analysts and traders, the prices could further drop to Rs 3,000 a quintal, down 17 per cent from the current prices. Till a few weeks back, prices in Guntur were between Rs 4,000 and Rs 4,500 a quintal, which have now dropped to Rs 3,400-3,600.

The last four trading days have seen a surge of Rs 2 a kg in spot prices, mainly on the back of demand pouring in from the North. At the same time, a tender from Kerala government for a thousand tonnes has also fuelled the market.

Guntur witnessed an arrival of 35,000 bags on Thursday against 50,000 bags in the first three days of the week. According to trading sources, farmers are holding their stocks to put brakes on the falling prices. "However, they cannot hold stocks for long. Moreover, arrivals will only increase in the days to come," said a trader.

Some marketmen in Guntur are of the view that prices could slip to as low as Rs 2,000-2,500 a quintal in February and March. However, exports pattern will play a vital role in price movement.

At present, there is little overseas demand from Bangladesh, Singapore and Malaysia.

"Demand is not so significant that market can go up substantially. Demand from China, however, could change the scenario," said a trader.

Commodity analysts admitted that chilli would remain in the bearish zone but added that if demand from various quarters comes all at a time, supply may not be able to match the offtake.

"This could result in markets going up, but for a short period," they said.

On the National Commodity and Derivatives Exchange, the chilli for February delivery closed at Rs 3,662 a quintal on Thursday, up 0.55 per cent, against yesterday's close of Rs 3,642 a quintal.