Chilli prices witnessed very choppy trade with biased towards downside during last week. Futures started the week on lower note on extended corrections amid higher arrivals at spot market.
Huge arrivals of fresh crop further added to the down side. However, futures took small recovery on lower level buying but failed to sustain and fell back. Reports of poor export demand also pressurized the prices.
However, buying at lower levels from local masala companies cushioned the prices. Therefore, on cues from futures prices traded down and closed on slightly negative note.
Outlook
Chilli prices are expected to trade range bound to down side biased on prevailing fundamentals.
Poor export demand from Pakistan, Bangladesh is likely to have negative impact on prices. Rising arrivals of fresh crop at spot market of Guntur might further pressurize the prices.
Higher production estimates as compared to the last year are also weighing on prices. However, demand from domestic buyers in small amount might limit huge losses during the week.
Factors to watch out
Arrivals at Guntur chilli market remained in the range of 15,000-35,000 bags
Andhra Rabi chilli area is reported around 0.49 lakh ha as on 25th January against 0.44 lakh ha year ago
As per data released by Spices board, during Apr-Nov, 2011 chilli export from India were reported down by 24% to 1,32,500 tonnes against the same period last year
As per Spices Board data, international price of chilli in New York market remained stable to $3.53 per kg during the week ended January 27th 2011 against $3.20 per kg quoted in the same period last year
Derivative Analysis
The NCDEX chilli February contract February contract prices, volumes and open interest have declined. It is a good indication that investors had liquidating all their long positions.
Further change in volumes traded might decide the trend.
Courtesy: Karvy Commtrade Ltd.
