Dried chili pepper prices rise in India amid crop damage and firm import demand

Dried Whole Chili Pepper

India

Supply Chain Management

Market & Price Trends

Published Mar 14, 2022

Domestic and export prices for dried chili pepper in India have been steadily rising since the beginning of 2022. Adverse weather conditions and insect attacks in December-January 2021-22 have significantly worsened the prospects of the new crop. The current year’s chili production is projected to fall by 20% YoY. Meanwhile, import demand for Indian whole dried chili remains firm, with China being the leading buyer.

At the end of W10 2022, farmgate offers for Teja chili medium-sized pepper in Andhra Pradesh reached USD2,210/MT, up 13% compared to W1 2022. It is also 33% more compared to the same period last year. Premium-quality Teja chili was offered as high as USD2,611/MT.

Source: Guntur Mirchi Market

Tridge representative In India, Rekha D, indicates that the demand for dried red chili has been firm over the past two months. The Indian economy has started to gradually open up after a series of lockdowns, which had boosted domestic consumption. 90% of the new dried red chili arrivals in Guntur and Khammam markets are sold promptly. However, the spice delivery volumes are trailing behind last year’s levels. Farmers and producers prefer to sell their reserves slowly ahead of a further price increase. Dried chili arrivals in the Khammam market totaled 18,833 mt between February 1-March 10, 2022, 50% less YoY.

Lower commodity availability is connected to the fall in dry chili production in 2021-22. Unexpected rainfalls at the end of 2021 in the central production regions damaged the plant development, causing the spread of thrip insects which caused fruit discoloration and leave damage. Dried chili production is forecast to decline by 20-25% compared with the previous season to 1.6-1.65 million mt. This substantial fundamental factor is likely to keep prices firm in the current season.

Domestic dry chili buyers compete with solid import demand, which adds a bullish sentiment on the market. India’s dry chili pepper exports rose to 461,005 mt in 2021, 8.6% more than in 2020. In January 2022, shipments were on par with last year’s figures at 21,200 mt. It confirms a substantial importer’s interest at the beginning of the year. At the same time, some traders in China, the biggest buyer of Indian dry chili, refrained from purchasing the commodity earlier this year, waiting for prices to go down. Despite high prices, the import demand from China is expected to remain robust, given a reduction in chili output in the leading producing provinces, Guangdong and Guanxi.