Chilli rises on export demand.

Kochi: Chilli prices have bounced back from their recent lows on the back of short covering and good export demand at lower levels. While some analysts feel that the market would remain steady at this level due to good demand, others say prices might go down further.

Market is also likely to factor in the sowing reports and progress of monsoon in the coming days traders said.

Nalini Rao of Angel Commodities Broking said buying at current price levels is good and exports to Pakistan and China is also good.

“The stocks are high but lower prices are doing good for the market. The market will remain firm until fresh crop starts arriving around October,” she added.

Generally, chilli arrivals from all over India hits the market from mid- October to May end. It begins with the first crop from Madhya Pradesh in the middle of October followed by Karnataka in November, Maharashtra in December and Andhra Pradesh and Tamil Nadu in January. Red chilli arrivals extend till May, traders said.

According to a data from the Spices Board, exports during April-July 2010, was almost 24% more in volume and 27% more in value terms. Board sources said that export demand from India will continue to grow until the new Chinese crop comes into the market by October.

However, Sudha Acharya at Kotak Commodity Services said that the current price (of Rs 44.50 per kg spot price at Guntur on Wednesday) would not sustain, due to subdued demand.

“For 2010-11 we expect the area under the spice to rise by 5.5% to 7.98 lakh ha. The increase in acreage is mainly due to higher realization by the farmers during the marketing season,” Sudha told FE.

Interestingly, the Agricultural Market Intelligence Centre (AMIC) of Acharya NG Ranga Agricultural University (ANGRAU) has estimated that the area under chilli will come down due to better returns from turmeric and cotton. Area under chilli crop in Guntur belt, one of the largest chilli farming area of the world could drop by 20%, the AMIC report said.

Source : financialexpress.com