Chilli weakens on active selling

The Chilli futures continued the losses on 3rd consecutive session on Tuesday. Futures started the day on lower note on extending selling.

However, prices took small recovery on short covering but failed to sustain the gains. Prevailing weak trend at spot market amid increased arrivals at spot market further added to the down side and futures ended in red.

Outlook

The Chilli April futures are projected to continue the downtrend on continued selling pressure on Wednesday. Increasing arrivals at spot market might also support the fall in prices. However, prices might witness good recovery on roll over of positions towards the closing.

Arrivals at Guntur spot market were around 50,000-60,000 Bags (Each bag= 40Kg.)

As per news sources, export demand is likely to remain sluggish for chilli as most of the importing countries has tighten their food safety standards to zero tolerance level

As per data released by Spices board, chilli exports during April- January 2010-11 stood around 2,00,000 tons up by 22% compared to same period last year

As per trade sources, Chinese chilli crop has be improved by 10-15% this year from last year’s losses

According to derivative analysis, prices are falling while volumes and open interest are rising. If prices are in a downtrend and open interest is on the rise, chartists know that new money is coming into the market, showing aggressive new short selling. This scenario will prove out a continuation of a downtrend and a bearish condition.