CHILLI

Chili Aug contract at NCDEX extended gains on 6th constant session by 0.25% shrugged off early gains to end steady as traders booked profits at higher levels. Good export demand from Sri Lanka and a scarcity of quality produce was supporting prices.

Indian chilli prices may jump by about 15% in next 2-months on robust export demand and a scarcity of quality produce in the physical market, traders, analysts and exporters poll says.

Chilli exports in the first two months of fiscal 2008/09 rose 21% to 50,000 tones on strong demand from Pakistan, which is the main competitor to India in international markets, Spices Board said in a statement last. Exports rose in the first two months and the momentum is expected to continue throughout the year due to poor crop in China and good demand from Bangladesh

Unseasonal rains have affected the quality of Indian chilli and stocks of premier quality produce have fallen by 68% to 1.5 million bags in cold storage in Guntur.

Unseasonal rains in March had created shortfall of premier quality produce and good demand for such produce from domestic and overseas market was pushing up prices. Pakistan, Bangladesh and Malaysia have been importing significant amount of the spice from India.

Another supportive factor is nil stock at exchange designated warehouses which prompting speculative buying. There is a shortage of chilli of the required specification for delivery and this would result in penalty for buyers in case of default.

In 2007/08 India's exports climbed 40.7 percent to 209,000 tones in 2007/08 due to strong demand from Malaysia, Bangladesh and Sri Lanka against estimated exports of 190,000 tones, Spices Board said last.

Official production figures were not available, but trade experts said in 2007/08, production would increase by 17% to 1.4 million tones. India usually exports about 10% of its output. Total stocks in the warehouses in Guntur would be 2.5 million bags of 40 kg each. Due to good rain, acreage is expected to go up by 20-25% in 2006-7 coming season.

India and China are the world largest exporters of chilli and contributed almost 25% of total export each. Also India has two Chilli season --- Mar to Aug and Sep to Feb.