Project Report On Commodity Market Chilli Commodity In India
Submitted To
Dr. Sridevi
Submitted By
Pentela Vijay Sec- A Roll No-29
1|Page
Introduction
Chilli is a fruit of the plant Capsicum annuum and Capsicum frutecens that belong to the family Solanaceae. It is known for its sharp acidic flavour and colour. It is primarily used in making beverages and medicines. Chillies originated in the Latin American regions of New Mexico and Guatemala as a wild crop in around 7500BC. This crop came into the Asian continent in as late as the 16th century. It became popular in the whole of Asia rapidly and native Asians started cultivating this crop. The south Asian climate suited this vegetable crop, and since then the concentration of production of chillies shifted to Asia. In todays scenario, the most sharp and valued varieties of chilli are grown and present in Asia only.
Global production of chilli stands at about 20.00 lakh MT to 25.00 lakh MT per annum. India is the largest producer and contributes about 10.00 lakh MT to 12 lakh MT annually followed by China, Nigeria, Peru, Bangladesh, Hungary. Globally Indian chillies are of superior quality which makes India the largest exporter of chillies. Domestic demand is good for chilli and the spice processing industry is growing at a very fast rate and is creating additional demand for commodity.
Cultivation Process
In Indian subcontinent, chillies are produced throughout the year. Two crops are produced in the year in each dry and wet season in the country. The dry season extends from mid march to August in which the rainfall level is much lower than other parts of the year. Thats why chilli crop requires proper irrigation in this season. The seed or the seedlings are planted in April and are harvested in August in this season. On the other hand, wet season starts from August till December. This season is accompanied with a good amount of rainfall and the crop is planted as and when the rainfall occurs. Harvesting of the crop takes place in December and chillies start reaching the major markets in February and March.
Chilli in India
India is the largest producer of chillies in the world. Its production level hovers around 1.1 million tons annually. India also has the maximum area dedicated to the production of this crop.
2|Page
Currently, chillies are produced through the length and breadth of the country making the most dominating player in the world market. India produces the maximum amount of chillies in the world figuring up to around 11 lakh tons and is also the leading country in context of area covered in chilli production. This crop is cultivated in almost all the states of the country.
Value chain of chilli
Variety of Chillies
The major varieties of India are Birds Eye Chilli (Dhani), Byadagi (Kaddi), Ellachipur (Sannam S4 Type), Guntur Sannam S4 Type, Hindur S7, Jwala, Kanthari White, Kashmir Chilli etc. Sannam S 4 variety is most popular variety, with its annual production estimated to be around 3 lakh tons a year. It is also the major variety that is exported.
Production of chilli in India
The major regions where chilli is cultivated in India are Guntur, Warangal, Khammam, Krishna, Prakasham, Hyderabad, Pundur, Nizamabad, Cuddpah, Rajamundry, Nellore, Dharwad, Mysore, Bangalore, Bellary, Ranibennur, Hubli, Gadag, Byadgi, Nasik, Ahmednagar, Sholapur, Aurangabad, Nanded, Amravati, Lasalgaon, Bareily, Khurja, Amristar, Nabha, Patiala, Sunam, Coimbatore, Ramanathapuram, Tuticorin, Tirunelveli, Virudunagar, Kanayakumari, Madurai, Salem, Tiruchi, Villupuram, Cuddalore, Jodhpur, Ajmer, Bhilwara, Pali, Sikar, Bharatpur, Swaimadhopur, Orissa, West Bengal and Madhya Pradesh . Andhra Pradesh stands first in the list of leading chilli-producing states in India and also constitutes the maximum acreage for chilli cultivation in the country. It occupies 50% share in the Indian total production and produces around 5.3 lakh tons of chillies. Karnataka follows Andhra Pradesh, which share 14% of the production in the country. The major chilli producing states in India namely Andhra Pradesh, Karnataka, Maharashtra, Orissa, Rajasthan and Tamil Nadu contribute to around 86% of total area for the chilli crop cultivation in the country and 90% of the total Indian produce.
3|Page
Production Shares of Major Chilli Producing States
Exports
India is also the largest consumer and exporter of this crop. It consumes around 6.2 million tons of chillies i.e. about 90% of the total production of the country. The demand from the chilli powder-producing sector constitutes to 30% of the total production in the country.
The above graph shows the volume and value of exports 2005-2010. As you can observe from the above graph that the exports of chilli is gradually increasing and sums up to 1200000 tons during the year 2009-10.
4|Page
Market Influencing Factors
Seasonal price fluctuations Overall production in the country World demand Stock available in cold storages Hedging among the various varieties of chilli
Major trading centres in India
The major trading centres of chilli in India are
Guntur largest chilli market in the world (Andhra Pradesh) Warangal (Andhra Pradesh) Khammam (Andhra Pradesh) Hindpur (Andhra Pradesh) Raichur (Karnataka) Bellary (Karnataka) Unjha (Gujarat) Chennai Kolkata Mumbai Delhi Ahmedabad Nagpur
Exchange
Chilli in India is traded in National commodity and derivative exchange ltd.( NCDEX)
Contract Specifications Unit of Trading
Quotation/Base Value Tick size Deliver Unit Delivery Center
5 MT
Rs Per Quintal Rs 1.00 9 MT with tolerance limit of 500kg Guntur,Warangal
The unit of trading for chilli is 5MT. Bids and offers may be in multiples thereof.
5|Page
Future Contracts Expiry Date
20 Jun,2011 20 Jul,2011 19 Aug,2011
Unit
Rs/Quintal Rs/Quintal Rs/Quintal
Price
8810 9050 9274
Margin
7.32% 7.18% 7.10%
Graphs Showing variation of prices of Future contracts Expiry Date on June 2011
14000 12000 10000 8000 6000 4000 Close Price 2000 0
The above graph shows us the future prices of chilli commodity with expiry date as on June 2011. We can observe from the above graph that the prices are decreasing from Feb-2011. The price on 10 Feb is around 11652 Rs/quintal and it gradually fell down to 8810 Rs/quintal as on 19 May 2011.
6|Page
Expiry Date on July 2011
12000 10000 8000 6000 4000 2000 0 Close Price
The above graph shows us the future prices of chilli with expiry date as on July 2011. We can observe from the above graph that the prices are decreasing from Mar-2011. The price on 10 Mar is around Rs 10704 and it gradually fell down to Rs 9050 as on 19 May 2011. Expiry Date on August 2011
14000 12000 10000 8000 6000 4000 2000 0
01-May-11
11-Apr-11
13-Apr-11
15-Apr-11
17-Apr-11
19-Apr-11
21-Apr-11
23-Apr-11
25-Apr-11
27-Apr-11
29-Apr-11
03-May-11
05-May-11
07-May-11
09-May-11
11-May-11
13-May-11
15-May-11
17-May-11
19-May-11
Close Price
The above graph shows us the future prices of chilli with expiry date as on August 2011. We can observe from the above graph that the prices are decreasing from April-2011. The price on 11 April is around Rs 10558 and it gradually fell down to Rs 9274 as on 19 May 2011.
Spot Price Traded Date
19 May,2011
7|Page
Unit
Rs/Quintal
Price
8797.7
Volume Details in value from Jan-06 to Dec-10
800000 700000 600000 500000 400000 300000 200000 100000 0 Apr-06 Apr-07 Apr-08 Apr-09 Series1 Series2 Series3 Series4
Jan-10
Apr-10
Oct-06
Oct-07
Oct-08
Oct-09
The above Graph shows us the volume details of chilli traded in values (in lakhs) during 2006-2010. We can observe that the values are fluctuating and the peak season is in the Sep-2006 where it touched 6, 93,516 lakhs.
Volume Detail in Quantity from Jan-06 to Dec-06
1200000 1000000 800000 600000 400000 volume 200000 0
Apr-08
Apr-06
Apr-07
Apr-09
Apr-10
Oct-06
Oct-07
Oct-08
Oct-09
The above Graph shows us the volume details of chilli traded in quantity (MT) during 20062010. We can observe that the values are fluctuating and the peak season is in the Sep-2006 where it touched 10, 97, 605 MT.
8|Page
Oct-10
Jan-06
Jan-07
Jan-08
Jan-09
Jan-10
Jul-10
Jul-06
Jul-07
Jul-08
Jul-09
Oct-10
Jan-06
Jan-07
Jan-08
Jan-09
Jul-06
Jul-07
Jul-08
Jul-09
Jul-10
Trends in Prices
12000
10000
8000
6000 Price
4000
2000
0 01-May-08 01-May-09 01-May-10 01-May-11 01-Mar-08 01-Mar-09 01-Mar-10 01-Mar-11 01-Jan-08 01-Jan-09 01-Jan-10 01-Nov-08 01-Nov-09 01-Nov-10 01-Sep-08 01-Sep-09 01-Sep-10 01-Jan-11 01-Jul-08 01-Jul-09 01-Jul-10
The above graph shows us the prices of chilli during Jan 2008- May 2011. As you can observe in the above graph, the prices of chilli are fluctuating and in each year during the months of February and March the prices are high and thereafter there is slight reduction in prices. This is because of the reason that the chillies reach the market during the months of February and March.
9|Page
