Chilli Market Outlook: Tight Supply, Firmer Prices & Export Demand in 2025–26

The Indian chilli market stands at a crucial crossroads heading into the 2025–26 season. The country, which accounts for approximately 2 million tonnes of annual output and leads global production, is facing 35–40% drops in anticipated output due to significant acreage reduction and weather volatility across main growing regions such as Andhra Pradesh, Telangana, and Karnataka. Sowing was notably prolonged, with activities extending into October–November, resulting in uneven harvest progress and uncertainty among both growers and traders. While official estimates indicate that carry-forward stocks are 8–10% higher year-on-year, trade participants note an effective supply contraction of about 30% due to the impact of acreage cuts—a figure that overshadows the headline stock numbers and underpins prevailing concerns around actual market availability in the months ahead.

Following a weaker pricing phase earlier in 2025—driven by the temporary comfort of healthy inventories—chilli prices have rebounded since January. The catalyst? Sharply lower arrivals and robust export interest, with China emerging as an additional major buyer. This supply-demand imbalance is expected to keep the market highly sensitive to harvest outcomes and international demand flows in the remainder of the season. Market sentiment remains cautiously firm, with traders and processors closely watching both domestic arrivals and export trends for early signals on future pricing. For stakeholders ranging from farmers to exporters, adapting quickly to these signals will be critical as price risks rise and volatility increases.

📈 Prices & Market Sentiment

Product	Type / Grade	Origin	Latest Price (EUR/kg, FOB)	Weekly Change (EUR)	Last Update	Sentiment
Chilli dried whole	Bird eye, Grade A (Organic)	IN – New Delhi	4.63	-0.02	2026-02-21	Firm
Chilli dried	Powder, Grade A (Organic)	IN – Andhra Pradesh	4.38	-0.02	2026-02-21	Firm
Chilli dried	Flakes, Grade A (Organic)	IN – Andhra Pradesh	4.33	-0.02	2026-02-21	Firm
Chilli dried	With stem	IN – Andhra Pradesh	2.14	-0.01	2026-02-21	Stable
Chilli dried	Whole, stemless, Grade A	IN – Andhra Pradesh	2.13	-0.02	2026-02-21	Stable

🌍 Supply & Demand Overview

• Supply Side: 35–40% decline in production forecast for 2025–26 due to reduced acreage and erratic weather in Andhra Pradesh, Telangana, and Karnataka.
• Historical Carry-Forward: Stocks up 8–10% YoY, but trade-adjusted effective availability likely down nearly 30% as acreage cuts offset higher carryover.
• Arrivals: Lower-than-expected season arrivals; protracted sowing led to inconsistent, late harvest flows.
• Export Demand: Stable, with China’s purchase share increasing; export interest has supported price gains since January.
• Domestic Demand: Firm consumption trends; buyers active due to fears of further tightening later in the season.

📊 Fundamentals & Market Drivers

• Acreage Cuts: Noted as the principal factor behind the dramatic supply squeeze, outweighing slightly higher inventories.
• Weather Risks: Late planting and patchy harvests add further unpredictability to final output figures.
• Speculative Activity: Increased interest in futures and spot trading as participants anticipate further price gains.
• Export Dynamics: Growing sales to China provide a strong floor for prices.
• Sentiment: Trade remains cautious but bullish on the back of visible supply contraction and steady demand.

⛅ Weather Outlook for Key Growing Regions

• Andhra Pradesh: Rainfall deficits during critical growth stages may limit recovery; temperature volatility could stress late-sown crops.
• Telangana & Karnataka: Irregular weather patterns continue, limiting further sowing opportunities and raising yield concerns for 2026 harvest.
• Impact: Any adverse events during final pod setting could sharply tighten availability and accelerate price rallies.

🌐 Global Production & Stock Comparison

Country	Est. 2024–25 Production (kt)	Change YoY	Stocks Trend
India	~2,000	-35–40%	Slightly higher carryover, but true availability down
China	~420	+Stable	Mostly steady stocks, increased imports from India
Thailand/Pakistan	~120/110	Stable to slightly down	Normal carry

📌 Trading Outlook & Recommendations

• Prepare for further price volatility as supply tightness persists into Q2 2026.
• Short-term: Merchants and processors should build moderate cover; major downside risk appears limited.
• Mid-term: Watch for export shipment data (especially to China); any further jump may spur additional price spikes.
• Producers: Maximize harvest efficiency and preserve quality during late-season picks to capitalize on high prices.
• Exporters: Focus on timely contract execution—delays may lead to costly replenishment at higher spot rates.
• End-users: Lock in medium-term supply via strategic contracts, especially if reliant on Indian origin.

📆 3-Day Regional Price Forecast

Product	Market	Today (EUR/kg)	In 1 Day	In 2 Days	In 3 Days
Chilli dried whole (bird eye)	New Delhi FOB	4.63	4.64	4.64	4.66
Chilli dried powder (Grade A)	Andhra Pradesh FOB	4.38	4.39	4.40	4.41
Chilli dried flakes (Grade A)	Andhra Pradesh FOB	4.33	4.34	4.35	4.36