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Chilli prices have surged by nearly 20 per cent in the last one month after rains during July-October damaged the crop in Madhya Pradesh.
The price of 334 grade chilli, a benchmark, at Guntur in Andhra Pradesh increased to Rs 6,834.35 a quintal on Tuesday from Rs 5,758 a month ago. In Guntur, the hub of chillies trade, 35,000 bags (of 40 kg each) were traded on Tuesday.
“At least 80 per cent of the first picking in Madhya Pradesh chilli crop was washed away by rains. Also, arrivals have been delayed by at least 20 days. This has pushed up prices,” said Alapati Srinivasa Rao, a trader in Guntur.
“We have got export demand from Bangladesh. The crop damage in Madhya Pradesh has really pushed up demand,” said Abhishek Bhandari, an exporter.
Chilli production in 2012-13 has been estimated at 12.99 lakh tonnes, down from 14.26 lakh tonnes a year ago. The crop was affected last year due to prolonged dry period in key States such as Andhra Pradesh and Karnataka besides farmers shifting to other crops such as cotton.
Andhra Pradesh accounts for about 50 per cent of the total production in the country, followed by Karnataka which accounts for about 10 per cent. Madhya Pradesh ranks fourth in terms of chilli production with the output making up nine per cent of the country’s production.
In the futures market, chilli prices on the NCDEX dropped on Tuesday. Contracts maturing for delivery in December dropped by Rs 200 a quintal to Rs 7,236. It quoted at Rs 6,232 a month ago.
“Prices are higher because export demand is good. But if you ask me, the main reason for the current spike is the Madhya Pradesh crop failure,” said a trader.
“We have got demand from Bangladesh, Malaysia, Sri Lanka and Indonesia,” said Rao, adding “Bangladesh demand could drop a bit ahead of elections there next week.”.
“It is Lankan demand that has lifted the prices. The price rise is not confined to just one variety because there is demand for different varieties for export,” said Bhandari.
Traders say prices, at the most, could gain another Rs 400 before beginning to wind down.
“The current uptrend may, at the most, last another week. After that the second pickings of the Madhya Pradesh crop will hit markets. That will lead to drop in prices,” Rao said.
Prices could tend to firm up again after mid-December once the arrivals begin to drop.
This year’s crop in Andhra Pradesh, on the other hand, is shaping up well with the acreage almost unchanged at around two lakh hectares.
“The acreage could be some two per cent more this year,” said Rao.
“At least 80 per cent of the crop in Andhra Pradesh is in a good shape. If weather holds good, production will improve,” Bhandari said.
subramani.mancombu@thehindu.co.in
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