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Export demand seen driving Teja chilli to record 150 rupees/kg

Friday, Jul 12 2019


 Prices of chilli, on the rise since about a month, are seen hitting record highs in around two months due to burgeoning export demand and falling supplies following a smaller crop last season.In Guntur, Andhra Pradesh, export-quality premium Teja chilli is currently being quoted at 13,200-13,500 rupees per 100 kg, at a striking distance of the record high of 14,000 rupees hit three years ago.

A month ago, the spice was being sold at 11,500-11,600 rupees per 100 kg. "We expect it (Teja variety) to trade at 15,000 rupees per 100 kg in the next six-eight weeks," said Janibasha Shaik, director of Amaravati Impex in Guntur. "This is first time in my life that chilli prices have shot up by a whopping 2,000 rupees per 100 kg since opening of the market after summer holidays on Jun 11."The chilli market is shut for nearly a month in May-Jun. This year, the market was shut between May 11 and Jun 10, before which the premium quality Teja variety was traded at around 11,000 rupees per 100 kg.Trade officials said currently, prices are reacting to the rapid drop in stocks, owing to buoyancy in exports, even as the new crop is almost six months away.


According to Spices Board India, India's chilli exports were down 10% at 318,000 tn in Apr-Dec. Though the board is yet to compile export data from January, sources in the board cited a pick-up in exports from January after China started buying directly from India instead of through Vietnam. This followed withdrawal of the duty-drawback benefit from Vietnam in January. Besides, there is good demand from Indonesia, Thailand and traditional buyer Bangladesh. And, demand from Sri Lanka is likely to pick up, said Ashok Dattani, a Mumbai-based exporter and proprietor of Ashok & Co. Deals for export of around 50,000 tn may have been signed in the last six-eight weeks, he added.


"Rising concerns over the new crop size due to scanty monsoon rainfall in key growing states is further fuelling the rally in chilli prices," said Laxmikant Awasthi, the Guntur procurement head of Chennai-based exporter Agro Crops.Awasthi pegs the chilli stocks at the 86 odd warehouses in Guntur at around 3.2 mln bags of 40 kg each, compared with the storage capacity of 5.5-6.0 mln bags.  Chilli production in Andhra Pradesh, which accounts for a little less than half the country's production, had jumped to over 14 mln bags (1 bag = 40 kg each) in 2017 as record prices the previous year encouraged more farmers to sow the spice. As a result, prices crashed, leading to a near 40% drop in output in the state in 2018 and, consequently, the current rally in prices. Though the current prices boost chances of a bumper crop again in the onging kharif season, a major shortfall in rains has led to questions on supply in the next marketing season. So far this monsoon season, Andhra Pradesh has received only 70.1 mm rainfall, 48% below normal. There were no pre-monsoon rains in key growing areas as well. This is reflected in total kharif acreage data, which showed that sowing has been completed over only 382,000 ha so far, 41.8% of the normal area of 915,000 ha.


 Crop-wise break-up of the sowing numbers was not available though. Telangana, the second-largest chilli grower, has reported good rains, though sowing in the state is yet to gain pace. According to Vijay Khetan, a prominent Hyderabad-based exporter of the spice, current prices have factored in delay in the new crop in Andhra Pradesh, as well as the buoyancy in exports. However, domestic demand continues to be negligible, as high prices have kept processors and traders on a wait-and-watch mode. "The next leg of rally may come from domestic demand, which typically starts rising from August when rains start receding," Dattani of Ashok & Co said.




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