Depressed Chilli Prices and Lack of Export Demand

Indian chilli prices continue to remain depressed due to subdued demand, and experts predict further bearish trends this season. China, the largest buyer, has already covered its position. Neighboring Bangladesh prefers to buy from Myanmar, putting additional pressure on India's red chilli market. "There is no demand from China, which vigorously buys the Teja variety. The market is depressed and recovery seems unlikely in the near term at least till July," said Sambasiva Rao Velagapudi, Chairman, All India Chilli Exporters Association in Guntur. China has ample stocks and is unlikely to return to the market in the next three months. Early in the season, China bought about 20-25 percent more, adding to the current market strain.

Quality and Pricing of Myanmar Chilli Affect Indian Market

The lack of demand from Bangladesh is significantly impacting the market. Bangladesh has shifted its preference to Myanmar's chilli, which boasts good quality and lower prices. This switch has kept Bangladesh away from the Indian market. During the 2022-23 period, Bangladesh was the third-largest buyer of Indian chilli after China and Thailand. Additionally, oleoresin companies have bought significant amounts of chillies, covering their nine-month requirements, and will not return to the market soon. Daily market arrivals are around 80,000 bags in Warangal and about 100,000 bags in Guntur. The marketing season will continue until the end of April. Cold storages in Karnataka are full, but there is still scope to store 8-9 million bags in Andhra and nearly 2-3 million bags in Telangana.

High Stock Levels and Low Demand Keep Chilli Prices Low

Karnataka has also seen further declines in chilli prices due to a lack of quality arrivals and demand. Prices are down by about 50 percent compared to the start of the season. Higher carry-forward stocks and a bigger crop have kept chilli prices depressed in Karnataka markets. Market arrivals are at a record high this year. Estimates show dry chilli market arrivals in Karnataka from December to March-end at 53.60 million bags, compared to last year's 35.01 million bags, an increase of 53 percent. During the 2021-22 season, market arrivals stood at 50.65 million bags. These factors have contributed to the continued slump in chilli prices, affecting farmers and traders alike.