Chilli Market Analysis & Updates

Chilli market analysis & trend — March,2017

Red chilli is one of the main cash crops in China, ranking first in the industrial scale of vegetables.From the perspective of the use of chilli is divided into fresh chilli and dried chili two categories,
(a) Fresh chilli for direct consumption, the main producing areas are Hainan, Guangdong, Yunnan, Sichuan, Chongqing, Shandong, Henan, Liaoning and other provinces (municipalities), summer and autumn seasons to produce mainly open planted, winter planting to equipment-based.
(b) Dried chili planting areas are concentrated in provinces (cities, districts) in Shandong, Henan, Hebei, Xinjiang, Hunan, Hubei , Sichuan, Chongqing and Guizhou, Production methods to open planted, which belongs to condiment series. Used as a raw material to be processed, easy to be storaged and shipped.

Since the beginning of this year, the prices of chili in our country have fluctuated greatly, especially the prices of dried chili have fluctuated greatly.

Overall, the output level of red chilli in China dropped significantly year-on-year year-on-year in 2016, the consumption volume kept rising slightly, the export volume was strong, the quantity and amount of imports both decreased, and the market price generally rose year on year and the price fluctuation increased.

It is estimated that red chilli planting area will increase year-on-year in 2017, the consumption volume will increase slightly and the export volume will increase slightly. If large natural disasters do not occur, chilli production is expected to increase year on year, the overall average price level fell.

Market updates in Nov,2017

(A) Increase the area of planting intentions, red chilli production is expected to increase
Affected by the high price of chilli in 2016, the enthusiasm of chilli cultivation is growing. The area is expected to increase to 23.9 million mu in 2017, an increase of 3.0% over the same period of previous year.
There are two main reasons:
Second, the relatively high efficiency of planting chilli, farmers planting chilli profit was significantly higher than other crop varieties in the same region.
In 2016, the unusually hot weather led to the low yield of chilli. If the weather is normal in 2017, the yield will resume to 1404kgs/mu, an increase of 4.0% over the same period of last year.
It is expected that under the dual efforts of expanding the area and improving yields, the production of chili in China in 2017 is expected to reach 33.56 million tons, an increase of 7.1% over the same period of last year.

(B)The demand of the market serves growing while the consumption quantity steadily increases slightly
Domestic chili consumer demand for many years to maintain an increasing trend for two main reasons: First, the spicy diet customs widespread, the domestic demand for red chilli and processed products will maintain its growth momentum; the second is with chilli in the medical, health, beauty, etc. Further exploration of functions, people continue to increase demand for processed chilli products, which led to the continuous expansion of the demand for raw materials of chilli
Taking all factors into consideration, the consumption of chili in 2017 is estimated at 31.5 million tons, up 5.3% over the same period of last year.

(C) International demand continued to increase, the number of exports greater slightly
The international trade of red chilli and its products has been increased year by the year. With the “One Belt and One Road” strategy in place, the trade volume of chilli countries in the international market to China’s fresh chilli industry will further increase.
At the same time, there is a big gap in the demand for deep-processed chili products such as capsanthin and capsaicin in the international market. Under the stimulation of international demand, our country will further increase the export volume of deep-processed chilli by relying on the advantages of abundant raw materials. It is estimated that the export volume of chilli in China will slightly increase to 320,000 tons in 2017, up 15.0% over the same period of last year.

(D) The average price may fall year-on-year
It is estimated that the overall average price of red chilli in 2017 is likely to decline.
First of all, if there is not frequent abnormal weather, the output of chili will exceed consumption in 2017, and the market situation of oversupply will occur.
Secondly, the price of chilli increased significantly in 2016 and brokers hoarding for price increases resulted in a marked increase in the inventory of dried chilli by the end of 2016 as compared with that in 2015, which increased the supply of chili in 2017, thereby increasing the overall average price drop year on year.

In terms of price movements in the year, the prices of red chilli in 2017 will continue to fluctuate in the past year. Prices of chilli, driven by consumer demand in the Spring Festival holiday, peak around within a year in February and then decline as the market volume increases, falling to their lowest point around August and then rising again to gradually climbing to the next The highest point before the next Spring Festival arrival.