Chilli prices fell by 0.4 per cent to Rs 5,010 a quintal as speculators trimmed their positions amid expectations of higher output.
Recent rains in major producer, Andhra Pradesh, and slack export demand have dampened prospects of the spice.
On the National Commodity and Derivatives Exchange, chilli for October delivery dropped by Rs 100 to Rs 5,530. Similarly, the spice for delivery in November traded lower by Rs 156 at Rs 5,742 a quintal.
Traders said offloading of positions by speculators following higher output expectations, mainly weighed on the spice prices at futures trade here.
Chilli arrivals in Guntur are estimated at 50,000 bags (1 bag - 45 kg) on Thursday, unchanged from Wednesday.
Spot prices at Guntur were ruling at Rs 5,717 a quintal. Prices were steady despite lower offtake as farmers were unwilling to sell their produce at lower rates.