In India, red chilly prices are under pressure due to reduced demand, notably from China and Bangladesh. China, which typically purchases the Teja variety, has decreased its buying, affecting market prices. China's demand dropped significantly as it has already purchased 20-25% more chillies this year compared to the previous season. Meanwhile, Bangladesh has shifted its buying preference to Myanmar, influenced by better crop quality and lower prices, impacting the Indian market where Bangladesh was the third-largest buyer.
Market conditions are also challenging in India due to oversupply and diminished demand. In Karnataka, prices have halved since the season began, with daily market arrivals around 80,000 bags in Warangal and 1 lakh bags in Guntur. The season's end is expected by April's end, with storage capacities nearing full in Karnataka. Conversely, Andhra Pradesh and Telangana have space for an additional 8-9 lakh and 2-3 lakh bags, respectively.
The situation is exacerbated by high carryover stocks and increased crop size, leading to a depressed market in Karnataka. Market arrivals have hit a record 53.60 lakh bags from December to March-end, a 53% increase over the previous year's 35.01 lakh bags. This oversupply, coupled with the reduced quality of chillies and price volatility, is deterring buyers, further depressing the market.