Mumbai: Packed warehouses and a drop in export demand have caused red chilli prices to fall rapidly in both spot and futures markets in the country, traders and exporters said.
The chilli market in Guntur in Andhra Pradesh, Asia’s largest spot market for the spice, is seeing daily arrivals of 20,000 bags of 40kg each on top of 4.5 million bags stored in the region’s warehouses, they said.
“There are no fresh export orders and traders already have enough stock,” said Alepata Srinivas Rao, a Guntur trader. “Traders don’t have space to store new output. All warehouses in the area are filled with this year’s bumper crop.”
The fall over the last two weeks comes after the spike in chilli prices in March on sustained exporter buying to meet demand from Sri Lanka, Indonesia, Pakistan andMalaysia on the back of crop damage in China.
“Prices rose sharply on export boom. But now the picture became clear—there is more output than demand,” Rao said.
At 4:34pm, the June contract on the National Commodity and Derivatives Exchange was down 1.2% at Rs4,815 per 100kg, falling more than 22% since 10 April.
The July contract, too, has fallen by a similar margin during this period. The spot prices, too, have moved in tandem. LCA 334, the most traded variety, fell by Rs736.35 to Rs4,432.75 per 100kg in the Guntur spot market.