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Indian chilli prices bounce back amid solid demand

July 5, 2021

1 mins read

The Mintec price of Byadgi chilli in the Guntur market, India, rose by INR 4,000/100 kg (+ 32%) in the four weeks to 23rd June, to INR 16,500/100 kg. Prices have recovered amid firm demand for good quality stock, following the previous closure of the market due to summer holidays and the pandemic. Prior to the market closure, the Byadgi chilli traded in Guntur at INR 16,000/100 kg in the week of 28th April, however, in the last week of May, the trading restarted at INR 12,500/100 kg amid demand uncertainty caused by the resurgence of COVID-19.

The pandemic peaked in India in the first half of May, with new daily infections climbing above 400,000, from around 11,000 in mid-February, causing uncertainty among local spice buyers. Amid the re-imposition of various social distancing measures and lockdown rules, the number of daily infections eventually dropped below 50,000 by the beginning of July.

From a historical perspective, the current prices continue to provide farmers with satisfactory returns on their chilli crops which should stimulate more chilli planting during the current Kharif season (monsoon crop). Indeed, there have been reports of solid demand for chilli seeds in India which supports this narrative. Assuming favourable weather conditions, an increase in availability from the Kharif harvest should provide the market with some downside potential in the latter part of the season.

On the demand side, India exported 601,500 tonnes of chilli in 2020/21, an increase of 21% y-o-y from 496,000 tonnes in 2019/20, according to data published by the Spices Board India. The growth in exports has been primarily achieved through buyers intensifying procurement activities amid concerns over COVID-19-related trade disruptions. Some of the export demand has been driven by increased consumption in the health and immunity sectors as a result of the coronavirus pandemic, and further boosted by consumers dining at home, at the expense of foodservices.

Jara Zicha
Jara Zicha

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