Weekly Review-Red Chilli
21-Dec-2024 07:21 PM
Export demand for red chilli is low: Production is less than last year
Export Demand and Local Market Trends: Red chilli prices remained subdued this week due to low export and local trade demand. However, reports indicate that the production of red chilli this season is lower than last year. Despite this, the substantial stock from the record production in the previous year remains available. The supply of new dry red chilli is expected to rise in January, which is unlikely to cause a price increase at the moment.
In Guntur Mandi, a key market in Andhra Pradesh, the daily arrival of new red chilli has increased to 15,000-20,000 bags, with cold goods arriving at 60,000-70,000 bags. The price of new Teja is quoted at Rs 164-165, while old Teja is priced at Rs 159-160. Export demand from China is low, and Bangladesh's demand is also limited. Exporters are waiting for the arrival of new dry goods to boost trade.
Price Outlook and Slowdown: Traders expect that while prices are significantly lower than last year, the market is unlikely to see a substantial slowdown. However, with the increase in new arrivals, the price of Teja in Guntur Mandi could fall further to Rs 150-155. Last year, in December 2023, the price of Teja quality in Guntur Mandi was Rs 228-230 per kg.
Stock Levels: Current stock levels in major producing states, such as Andhra Pradesh and Telangana, are higher than last year. In Guntur Mandi, the stock stands at 35-36 lakh bags, up from 20-22 lakh bags last year. In Telangana, the stock is estimated to be 18-20 lakh bags compared to 10-12 lakh bags in the previous year.
Low Production: The production of red chilli has been affected this year due to unfavorable weather conditions and farmers receiving inadequate prices for their crops. Reports indicate that production is low in key producing states like Andhra Pradesh, Telangana, Madhya Pradesh, and Karnataka. The production in Andhra Pradesh is expected to be under 1.5 crore bags, down from 2 crore bags last year. Telangana's production is estimated at 55-60 lakh bags, compared to 75-80 lakh bags last year. Madhya Pradesh has also seen a decline, with production estimated at 30-35 lakh bags, down from 34-35 lakh bags in 2023.
Market Prices: The prices of red chilli have remained subdued across producing centers. In Guntur Mandi, the price of Teja dropped slightly to Rs 164. In Khammam Mandi, Teja quality opened at Rs 168 but decreased to Rs 165 in the middle of the week and closed at Rs 167. In Warangal Mandi, the price of Teja quality declined from Rs 160 to Rs 155 by the end of the week.
Export Trends: Despite the slowdown in domestic prices, red chilli exports have seen an uptick. According to the Spices Board, 271,948 tonnes of red chilli were exported during April-September 2024, a slight increase from 260,219 tonnes during the same period in 2023. While this is still far from the record export levels of previous years—649,815 tonnes in 2020-21 and 557,144 tonnes in 2021-22—the total export for 2023-24 is expected to reach 601,084 tonnes.
Overall, the market is experiencing a mixture of low domestic demand, higher stock levels, and reduced production, with a slight uptick in exports. Prices are unlikely to rise significantly in the short term, given the increased arrivals and limited export demand.