Though the prices will be forced to a reach previous year's level only in May when the demand normally dries up, informed Ashok Dattani, a leading wholesale trader at the Navi Mumbai APMC (Agriculture Produce Market Commission) market.

Though the all-India production is likely to remain steady at last year's 90 lakh bags, the supply position will be tough as there is no carry forward stock at the begining of the new season unlike previous year's 25 lakh bags.

The loss in production this year in Madhya Pradesh and Maharashtra will be compensated by more production in the states of Andhra Pradesh and Karnataka. Andhra Pradesh is expected to reap a crop of 60-65 lakh bags while expectation of crop in Karnataka is put at 15-20 lakh bales. Other states areexpected to contribute 10 lakh bags in the total basket of chilly production.

Crop from Karnataka, especially Byadgi has started arriving at the marketing centres and the prices range from Rs 35-55 as per quality. Further decline in these varieties is not expected in the near future as the weekly arrivals have peaked at 50000 bags.

Guntur variety from Andhra Pradesh has started arriving to the markets in the range of 5000-10000 bags a day and will gradually increase further to 30000 bags a day by the begining of February which will accommodate demand to a lrge extent. This will spin off the prices downward to a level of Rs 30-40 a kilogram.

In fact even at this level the prices will be higher compared to last year as the stock from previous season has completely exhausted and the traders are in a hand to mouth position. Last year the prices ranged between Rs 20-25 a kilogram which are unlikely to see the light of the day this year.