Weekly Review-Red Chilli

15-Feb-2025 07:58 PM

No possibility of slowdown in red chilli: Export demand is good

The weekly review of red chilli markets indicates that, despite a decrease in prices, demand from exporters remains strong, and the market is not expected to experience significant slowdown in the near future. Here's a summary of key points:

Market Conditions

  • Export Demand: Good demand from China and Bangladesh, along with local stockists, has helped maintain strong prices despite the arrival of new goods. Red chilli prices in markets like Guntur and Khammam are lower than last year, but no major decline is expected.
  • Price Levels: Teja quality red chilli is priced lower than last year. In Guntur, the price has dropped to Rs 137/138, and in Khammam to Rs 139/140, compared to last year’s prices of Rs 202/205 in Guntur and Rs 208/210 in Khammam.
  • Potential Decline: Traders expect a small decline of 3-5 rupees once Ramzan demand ends, but a larger decrease is unlikely.

Production and Stock

  • Production Decrease: Red chilli production is expected to be lower this year. Andhra Pradesh's production is estimated at 1.5 crore bags, down from 2 crore bags last year. Telangana's production is also lower, with estimates at 55-60 lakh bags, compared to 75-80 lakh bags last year.
  • Stock Availability: Despite lower production, stocks are relatively high. Guntur has 25-26 lakh bags of red chilli in stock, compared to 12-14 lakh bags last year. Telangana’s stock is estimated at 12-15 lakh bags, up from 7-8 lakh bags last year.

Arrival of New Goods

  • Arrival Volume: There is a heavy arrival of new red chilli in the markets, particularly in Guntur, which is receiving about 1 lakh bags. Khammam is seeing 60-70 thousand bags, while Warangal is receiving 25-30 thousand bags. The arrival pressure is expected to continue until February, with a decrease expected in March as farmers begin holding back produce in anticipation of price increases.

Price Trends and Forecasts

  • No Immediate Price Rise: Despite good demand, there is no immediate price rise expected. However, as new arrivals decrease, there could be an improvement in prices by April. Farmers are expected to hold back their stock in hopes of higher prices.
  • Price Decline & Future Outlook: Prices may fall by 3-5 rupees, but traders believe there will be a potential increase of 20-25 rupees per kg by June-July.

Export Performance

  • Increased Exports: Red chilli exports have risen by 10% during the first eight months of the 2024-25 financial year. The export volume was 377,778.29 tonnes, compared to 342,890.46 tonnes last year, despite a 13% decrease in income due to lower prices.
  • Annual Export Outlook: The export for the 2024-25 season is expected to exceed last year’s levels, with a possible record surpassing the 649,815 tonnes exported in 2020-21.

In summary, the red chilli market shows strong export demand, but lower prices due to high arrivals and reduced domestic production. While a small price dip is expected, significant price improvements are forecasted for later in the year.

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