Weekly Review-Red Chilli

23-Nov-2024 07:30 PM

Fall in Red Chilli Prices: After Madhya Pradesh, Arrival of New Red Chilli has Started in Guntur as Well

Fall in Red Chilli Prices: Arrival of New Red Chilli in Guntur and Other Markets

This week, the price of red chilli has dropped due to several factors. The arrival of new red chillies has started in Guntur, Andhra Pradesh, and Telangana, following the earlier arrival in Madhya Pradesh. Despite a 20-25% decrease in sowing across all major red chilli-producing states, the abundant stock from last season is keeping prices stable.

Factors Impacting Prices:

  1. Weather and Quality: While rain has affected the quality of red chillies in Madhya Pradesh, the chillies from Andhra Pradesh and Telangana are reported to be of good quality due to favorable weather conditions.
  2. Stock Availability: Despite a decrease in production across the states, the accumulated stock from last year is significant, leading to a lack of upward pressure on prices.
  3. Stockists' Selling: Stockists are liquidating old stock due to the arrival of new red chillies, increasing supply. The daily arrival in Guntur is currently around 1 lakh bags, with Khammam and Warangal seeing around 12,000–15,000 bags daily.

Price Trends:

  • Current Prices: Prices have dropped by Rs 200-300 in production centers, with a notable decline of Rs 6,000-6,500 per quintal compared to the same period last year.
  • Comparison to Last Year: In November 2023, red chilli Teja in Guntur was priced at Rs 23,000-23,200 per quintal, while it is currently priced at Rs 16,000-16,200 per quintal. Despite the lower prices, demand remains weak as buyers are holding off in anticipation of further arrivals.

Production Estimates:

  • Madhya Pradesh: Production is expected to fall to 30-35 lakh bags, down from more than 40 lakh bags last year.
  • Andhra Pradesh: Production is estimated at 1.5 crore bags, compared to 2 crore bags last year, provided the weather remains favorable.
  • Telangana: The expected production is 55-60 lakh bags, a decrease from 75-80 lakh bags last year.
  • Stock Levels: Guntur, a major market, currently holds 40-42 lakh bags, while Telangana has an estimated 25-30 lakh bags in stock.

Market Outlook:

Despite the lower production estimates, the high existing stock of red chillies and the increased arrival of new chillies suggest that prices in Guntur could decrease further to Rs 150-155 per quintal from the current Rs 160-165 per quintal. However, there is a possibility of price improvement if demand from China and Bangladesh increases, though both are currently weak.

Export Data:

  • Export Trends: According to the Spices Board, red chilli exports during April-August 2024 were 222,412 tonnes, a slight decrease from 226,352 tonnes during the same period in 2023. In the 2023-24 season, 601,084 tonnes of red chillies were exported, compared to 524,017 tonnes in 2022-23 and 649,815 tonnes in 2021-22.

Conclusion:

The fall in red chilli prices is primarily driven by strong stock availability and the early arrival of new produce. While there is a decrease in production estimates across major states, the excess stock from previous seasons is limiting the price hike. However, if demand from key export markets like China picks up, prices may stabilize or increase in the coming months.

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