China’s produce this year will set the price trend

Sufficient stock

Despite the

lean season, considerable quantity of deliveries on the NCDEX platform is pulling down prices.

The stocks

available this year in the cold storages at Guntur are among the highest.

Suresh P. Iyengar

Mumbai, July 8 Chilli futures in India are looking to the Chinese markets for price signals. China, a major chilli exporter, resorted to imports from India due to large-scale crop failure last year, which in turn pushed up prices here.

China’s produce this year, which is expected to hit the market in October, will play a crucial role in setting the future price trend in the Indian markets. Chilli prices on NCDEX have been falling in the last couple of weeks.

The July contract dipped from Rs 4,715 per quintal on June 21 to Rs 4,356 on Friday. August delivery fell from Rs 4,807 per quintal on June 21 to Rs 4,440 this Friday. The September contract slipped from Rs 4,900 on June 21 to Rs 4,534 this weekend.

Chilli prices in the Guntur spot markets fell from Rs 4,982 per quintal in June to Rs 4,760 on Friday.

Stock Availability

“Despite June being a lean season, there has been a considerable quantity of deliveries happening on the NCDEX platform which is pulling down the prices consistently,” said a trader. The stocks available this year in the cold storages at Guntur are among the highest at 53-lakh bags. Farmers are holding about 5 to 7-lakh bags.

There are about 69 cold storage companies in Guntur. The previous high of stock availability in June was 50-lakh bags in 2005.

A Kotak Commodity report said: “Arrivals in the spot market are around 35,000-40,000 bags inclusive of the stock from cold storage. Arrivals during the last month have been good as there were sufficient stocks in the market.” Kharif sowing of chilli in Guntur, the major chilli growing centre, is progressing well.

Andhra Pradesh has received good rainfall in the last one week.

Chilli Cultivation

“The current climate in Guntur is favourable for chilli sowing, which will start in the first week of July. Area under chilli cultivation this year is expected to be higher compared with last year due to better price realisation,” said the report.

The normal acreage of chilli in Andhra Pradesh is 1.6 lakh hectare and this year it is estimated to be between 1.50 and 1.80 lakh hectare. The major chilly growing districts of Andhra Pradesh are Guntur, Warangal, Khammam, Krishna and Prakasham.

The marketing season begins in the first week of February, peaks during April and ends mid-May.

Large export orders in 2006 lifted the prospects of the crop, which pushed up the area under chilli cultivation this year.

India exports about 80,000 tonnes to 1 lakh tonnes annually. India is the world’s largest producer, consumer and exporter of chilli in the world.

The country has the largest area under chillies in the world.

(This article was published in the Business Line print edition dated July 9, 2007)
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