Abundant Stock and Weak Demand Lower Red Chilli Prices

The red chilli market has significantly declined due to the abundance of stock in Guntur and the cooling off of both domestic and export demand. The Bareilly and Indore lines do not face much pressure. But old stocks are still plentiful and being sold at lower prices. In these circumstances, there is no possibility of a long-term price increase until the new crop arrives.

Low Export Prices in Neighboring Countries Affect Indian Market

Export demand has been very weak this season because red chilli prices in Sri Lanka, Bangladesh, and Pakistan have been very low. The weakening of their currencies has led traders to export at lower prices, affecting India's exports. Additionally, there is a large stock of red chilli in all Bengal markets, including Kolkata and Durgapur, which is being sold cheaply. The light goods from South India are also being sold at lower prices in Delhi, Haryana, and Punjab. With a very good crop from Guntur, most cold stores in South India are stocked with red chillies, and producers still have stock from the previous crop.

High Initial Stock Levels and Low Consumption Affect Prices

Last year, high red chilli prices led farmers to sow more in Guntur, MP, Bihar, Bengal, and UP. Traders also stocked goods at high prices at the season's start. Now, due to added costs of interest and freight, prices are being reduced as goods are sold in the markets. Some big farmers who had held onto their stocks are now selling, leading to ample red chilli supply everywhere.

The absence of weddings in May and June has also negatively affected chilli consumption. Additionally, while the crop was good in Indore and Bareilly, much of their raw material has already been sold, reducing pressure there. However, customer demand remains low, and with abundant stock all around, bullish trading should be avoided.

In summary, the red chilli market is currently experiencing low prices due to high stock levels and weak demand. Export challenges and abundant domestic supply have further pressured prices. Therefore, traders are advised to avoid long-term bullish positions until the new crop arrives.