Chilli futures in NCDEX dropped, ended sharply lower on weak spot market, where demand was subdued and profit booking and November month futures extended losses to hit a new contract low of Rs 5155 on the opening trade. The prices are forecasted to trade remain sideways to negative bias in the short term.
India's chilli cultivation has been gaining pace but acreage under the spice may fall by up to 10 percent as some farmers have diverted area to more lucrative cotton, India’s chilli exports in August fell by 12.7 percent to 16,000 tonnes, the Spices Board data showed.
In Guntur, a key spot market in Andhra Pradesh, the price dropped by 8 rupees to 5,262 rupees per 100 kg. Ongoing festival season demand is not picking up till now, traders and stockiest are snot active, their releasing their stocks. The open interest in October contract has increased by 65 tonnes to 2370 tonnes. A weak rupee, which increases exporters' returns and a shortfall of quality produce in the physical market, are capped the loss.
Influencing Factors: Poor spot market
Profit booking
Stockiest selling
Lower trade volumes in exchange
Fall in domestic demand
Export demand
Unchanged exchange stocks
Weaker rupee supporting the exporters
Drop in the acreage
The chilli production in the country is likely to be below the projected target of 1.2 million tonnes in 2007-08.
Andhra Pradesh, the biggest producer, received unseasonal rains in March, which affected the quality of the crop.
India’s chilli exports in August fell by 12.7 percent to 16,000 tonnes, the Spices Board data showed.
Technical Outlook Chilli October closed below 9 day EMA and 21 day EMA.
Today’s Recommendation NCDEX Chilli Oct sell 5250-5260 SL above 5315, targets 5210,5162,5124
Courtesy: JRG Wealth Management
