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A. Srirengarajan

Chennai, Sept. 16 Ample stocks in Guntur and sluggish demand are likely to result in chilli futures ruling weak in the near term.

Currently, spot prices quoting around Rs 3,800-4,000 a quintal on improved arrivals and reduced offtakes. The prices are less by around Rs 400 compared with last week. Adequate stocks coupled with lacklustre demand are likely to put pressure on chilli prices, according to Angel Commodities.

According to Kotak Commodity Services Ltd, prices in the spot market could firm up as offtake is expected to improve. Currently, arrivals are 35,000 bags, while offtake 20,000 bags. Export demand from Bangladesh was stable.

Buying at lower-levels and short coverings by market participants helped chilli futures to surge last week but this week, bearishness set in with prices declining on Monday. However, on Wednesday, futures gained since participants resorted to short covering.

Chilli prices could draw strength in the medium term on lower stocks in NCDEX warehouse in Guntur and hopes of fresh export enquiries. Festive demand in the domestic market as well as overseas, especially from Bangladesh, Malaysia and Sri Lanka, on the occasion of Ramzan, could help its momentum. But a spot of bother could be arrivals from Madhya Pradesh by November and this could have a long term effect, said Angel Commodities in a note.

Kotak Commodity said there were indications of long accumulation of October contracts, while November was witnessing long liquidation.

On Friday, September contract ruled at Rs 4,786, while October was quoted at Rs 4,780 and November at Rs 4,374.

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