Sluggish Assam tea prices dampen trade

Even as the average price of Indian tea from the first flush rose in the export market by 3%

Even as the average price of Indian tea from the first flush rose in the export market by nearly three per cent, sluggish prices of Assam tea continued to dampen the trade. Though exports from northeast India, led by Assam, rose marginally, less than one per cent to 6.7 million kg (mkg), both the average tea price as well as the total realisation declined. 

During the January-April period, Assam tea fetched an average price of Rs 213.10 a kg in the export market, 6.4 per cent less than the corresponding period the previous year. The total price realisation also declined by nearly six per cent to Rs 142.78 crore in the same period. On the other hand, teas from south India fared much better as its price realisation increased by nearly eight per cent to Rs 461.16 crore and the unit price surged by 15.55 per cent to Rs 166.85.

Industry officials are of the view that the global demand for Assam tea is stagnated because of the oversupply from primary CTC (crush tear curl) markets like India and Kenya last year.

Rating agency Icra says that as Kenya and Sri Lanka have faced 11 per cent production loss during the January-April period leading to a supply glut this year, Indian tea firms can exploit the situation to their advantage. “However, there is no immediate visible sign of an increase in tea prices from Assam as a result of crop shortage in Kenya or elsewhere,” Arijit Raha, secretary general, Indian Tea Association (ITA), told Business Standard.

Raha added that carryover stocks from previous years might have led to lower demand. In May, industry officials reported a 24 mkg carryover stock in the domestic market.

According to Icra, theauction prices in Sri Lanka and Kenya have increased by 44 per cent and 24 per cent, respectively. Prices of Sri Lankan tea, mostly the orthodox variety, surged to touch $4.08 a kg during January-April, as against $2.84 a kg in the corresponding period of the previous year. Kenyan tea prices, which are entirely of the CTC variety, touched $2.98 a kg, against $2.41 a kg.

A N Singh, managing director at Goodricke Group, however, said, “The price fall per unit is primarily because of increased production from small tea growers, whose average price is less than the estate produce.” During the first three months of the current year, estate produce from north India fell 28 per cent to 26.34 mkg, while the production from small tea growers fell only by about four per cent to 23.23 mkg.

According to the ITA, average auction prices in the domestic market have remained muted so far this year. Prices of Assam tea in the Kolkata auctions stood at Rs 137 a kg on average, down 5.5 per cent, while Guwahati auction prices were lower by nearly five per cent at Rs 121 a kg. Muted price realisations prevailed in the Siliguri auctions as well at Rs 120 a kg.