Chilli August futures in NCDEX hit the lower circuit on Wednesday as traders booked profit after a parliamentary panel suggested India should discourage futures trading in agriculture commodities to contain speculative trading. A strong rupee against dollar, which reduces exporters’ returns, also weighed on prices. The rupee rose to its highest in more than two months on Wednesday. Good export demand from Sri Lanka and Malaysia was supportive for the prices. Andhra Pradesh received unseasonable rains in March, which affected the quality of the crop. Stocks of medium and best quality produce in cold storages in Guntur have fallen 34.8 to percent to 3 million bags, compared with 4.6 million bags a year ago. Chilli exports in the first two months of fiscal 2008/09 rose 21 percent to 50,000 tonnes. Though the local demand from northern states has been low, good demand is reported from West Bengal. In Guntur, a key spot market in the southern state of Andhra Pradesh, the price fell by 24 rupees to 5,210 rupees per 100 kg.

Influencing Factors: Chilli

Weakness in spot market
Profit booking in higher levels
Panic selling triggered on the report of parliamentary panel
As per Spices Board, Chilli exports in the first two months of fiscal 2008/09 rose 21 percent to 50,000 tonnes on strong demand from Pakistan.
The Warehouse stock movements remain steady.
The chilli production in the country is likely to be below the projected target of 1.2 million tonnes in 2007-08.
Drop in output in the major competitors like Pakistan & China have enhanced export opportunities
Andhra Pradesh, the biggest producer, received unseasonable rains in March, which affected the quality of the crop.
The export of chilli from India has reached an all time high of 2,09,000 tonnes valued at Rs 1,097.50 crore, an increase of 41 per cent in volume and 36 per cent in value terms

Technical Outlook

Technically Chilli August closed below 9 day EMA and 21 day EMA.

Today’s Recommendation

NCDEX Chilli August sell 5560-70 SL above 5650 targets5470, 5414, 5360