With China, the largest buyer, having covered its position and neighbouring Bangladesh preferring to buy from Myanmar, India’s red chilly prices will likely come under pressure after having been bearish throughout this season.

“There is no demand from China, which buys the Teja variety. The market is depressed and recovery seems unlikely in the near-term at least till July in absence of any major export demand,” said Sambasiva Rao Velagapudi, Chairman, All India Chilli Exporters Association in Guntur.

China has lot of stocks and is unlikely to return to the market in the next three months. In fact, the demand from China was good in the early part of the season and they have bought about 20-25 per cent more this year, Velagapudi said.

Competitive Myanmar

However, the lack of demand from Bangladesh is being felt in the market. Bangladesh has switched preference this year and has been sourcing from Myanmar, where the crop was good this year. Also, the Myanmar chilli quality was good and they were offering to Bangladesh at a lower price, which has made them stay away from the Indian market, Velagapudi said.

Bangladesh was the third largest buyer of Indian chillies after China and Thailand during 2022-23, as per the Spices Board data.

Velagapudi said the oleoresin companies have bought considerable amount of chillies and have covered their position for their nine months requirement. So, they will not come to the market to buy again, he said.

The daily market arrivals are in the range of around 80,000 bags in Warangal and about 1 lakh bags in Guntur. The marketing season may go on till the end of April, Velagapudi said, adding that the cold storages in Karnataka are full, while there’s scope to store some 8-9 lakh bags in Andhra and some 2-3 lakh bags in Telangana.

Depressing factors

In Karnataka too, the chilli prices continue to decline further amidst lack of both quality arrivals and absence of demand, said Tejraj S Patil of R G Patil and Co, a large trader and exporter in Byadagi. Prices are down by about 50 per cent compared with the start of the season on lack of demand as most of the buyers have covered their positions, he said.

Higher carry forward stocks and a bigger crop have kept the prices of chillies depressed in the markets of Karnataka this year. According to SpiceExtra, a platform for R&D initiatives in dry chilli, market arrivals are at a record high this year.

SpiceExtra estimates the dry chilli market arrivals in Karnataka from December to March-end at a record 53.60 lakh bags of 30 kg each over the same period last year’s 35.01 lakh bags, an increase of 53 per cent. During 2021-22 season, the market arrivals stood at a high of 50.65 lakh bags, says Basavaraj Hampali of SpiceExtra. “While the quality of market arrivals has come down in the recent past, the price volatility is keeping the buyers away,” Hampali said.