Price Analysis of Red Pepper in India

From Jun-23 to Sep-23, the price of dried stemless red pepper in India witnessed an upward trend, reaching its peak in Sep-23 at EUR 3,210 per metric ton (mt), an increase of 5.2% month-on-month (MoM) from EUR 3,050/mt and a surge by 21.1% year-on-year (YoY) from EUR 2,650/mt. This surge was primarily triggered by heavy rains in Madhya Pradesh, which raised concerns about the quality of the upcoming crop, impacting market sentiment. Irregular rains in key red pepper-producing areas destroyed 14,000 acres of red chili crops, with partial loss of color in the remaining crops. The reduced crop arrivals, coupled with damage in specific regions, exerted upward pressure on prices.

Figure 1. Price of Dried Stemless Red Pepper in India

However, the price trended downward to EUR 3,170/mt in Oct-23, a 1.2% MoM decrease from Sep-23. The declining price trend continued in Nov-23 and Dec-23, down to EUR 3,060/mt and EUR 3.030/mt, respectively. This decline coincided with the commencement of the harvest season for red pepper in October. The market in Q4-23 adjusted to the arrival of new crops from Madhya Pradesh, resulting in decreased prices in other regions like Andhra Pradesh and Telangana. This typical supply-demand dynamic led to a correction in prices.

Figure 2. Seasonality of Dried Red Pepper in India

In W2 of 2024, the price experienced a slight increase to EUR 3,080/mt from EUR 3,070/mt in W1 of 2024. However, Tridge anticipates this as a temporary shift, as the mid-January harvest season is expected to bring a surge in supply, leading to price recovery. Favorable weather conditions are forecasted to be good during this harvest season from mid-Jan-24 to Mar-24.

Despite weather anomalies from Jun-23 to Sep-23, the Ministry of Commerce and Industry in India predicts that the production of red pepper is expected to increase by 12.2% YoY to 2.06 million metric tons (mmt) in 2023. The higher supply of red pepper has resulted in increased crushing into powder. The price of organic powdered red pepper in W1 of 2024 was EUR 4,150/mt and has been stable in W2 of 2024. Assuming favorable weather, the red pepper harvest season is expected to be good, translating into higher crushing of powdered pepper. However, caution is recommended, and market fluctuations should be monitored for a more accurate assessment going forward.

Figure 3. Price of Organic Powdered Red Pepper in India