NCDEX Chilli futures declined further on the back of short selling triggered by higher production. Participation increase on Commodity Futures Exchanges in selling side indicated as prices have declined while volumes and open interest have increased.
Profit booking was seen earlier on the back of higher production concerns from the producing regions amid subdued demand. Arrivals at Spot market of Guntur are hovering in the range of 60,000-80,000 bags.
Chilli crop is expected to be higher this year and the estimates vary between 10-12 lakh tonnes to 12-13 lakh tonnes against an estimated 8 lakh tonnes last year. The production in Madhya Pradesh is up by 20% this year and arrivals started flowing earlier in to the market.
Exports have shown a declining trend. The crop in China, a major producer of the high colour- low heat variety is reported to be good. Chilli exports were down by 17% to 169,500 tonnes during April to January 2012.
The 3rd round of chilli harvesting has already begun in Karnataka and fresh arrivals have gained momentum in local mandies. Spot market of Guntur will be closed for one month in May amid peak summer month.