Chilli prices rose to a week's high on the spot and futures market on fears that the new crop has been badly damaged.
“Farmers had been hoping for a good crop this year. But unseasonal rain in the first week of December affected the crop and the damage is reported to be severe,” said Mr S. Surya, an exporter from Guntur.
“At least 50 per cent of the crop is feared to have been damaged by the cyclonic storm that hit the growing areas in December. In addition, diseases are also affecting the crop,” said Mr Alapati Srinivasa Rao, another trader in Guntur.
“The quality of the crop is inferior but we think the damage is not as bad as it is being reported to be. We find too much of speculation on the futures exchanges,” said Mr Mahaveer Kumar of Rajendra Spice Products in Guntur.
Modal price
On Monday, quality chilli of the new crop commanded as high as Rs 9,200 a quintal, though the modal price or the rate at which most trades took place was Rs 7,000. Against this, the prices before the market closed for Sankaranti holidays were Rs 6,600-8,900, while the modal price was Rs 6,600.
“In view of the crop failure, we have been told that the new crop's opening price will be Rs 7,000 a quintal,” said Mr Rao.
“Prices for chilli this year will be far higher than last year,” said Mr Surya.
On NCDEX, February contracts rebounded to Rs 8,406 a quintal against Rs 8,082 during the weekend, while March contracts ended at Rs 8,554.
On January 4, February futures hit a contract high of Rs 9,178.
“Currently, arrivals are around 12,000 bags (40 kg each) and they are expected to pick up in a month's time. Then arrivals could be over 35,000 bags,” said Mr Kumar.
Though nearly 10 lakh bags of the old chilli crop are available, they are expected to be sold off before the new crop arrivals peak.
During the last few years, chilli production in the country has been averaging around 13 lakh tonnes. Of this, 7.5 lakh tonnes come from Andhra Pradesh.