Fresh tea hits mart with a high of Rs 90-150/kg

Tea is suddenly hot again. New-season teas have started trickling into the market in small quantities with prices ranging between Rs 90 and Rs 150 a kg against an average of Rs 68 in April last year.

After almost two months of speculation, with the news of drought from Kenya emanating, small amounts of the first flush teas from parts of Assam and Dooars have made their way into the market through private sales.

If the April (last year) average is taken as a benchmark, the current prices are significantly higher. While the average April price in 2003-04 was Rs 63.95 a kg, it was Rs 67.26 in 2004-05 and Rs 67.92 last year.

Industry sources said, while the prices are in the range of Rs 90-150 a kg, the bulk of teas sold is in the region of Rs 90-110 a kg.

However, the sources cautioned that initially, at this time of the year, exuberance is high, so the true indicator for prices could be gauged only in April. "These were a clutch of buyers for a small quantity of tea," they said.

The new tea currently being sold is through private sales, as a few auctions have been dropped. So, the new tea would come for auctions only in April. The next auction is slated for the end of the month, which would be a clearance sale.

The industry is expecting prices in April to be much higher than last year. "Last few years, the season started with a small quantity of new-season tea and a much higher quantity of old tea, but this time around the season would start on a clean slate, given that a couple of auctions had been dropped because of low quantity of tea," they said.

Moreover, the Tea Board of Kenya has started crunching numbers and the shortfall in January is estimated to be 47 per cent at 17.9 million kg.

The highest drop in production was recorded in the tea-growing regions of West of Rift where production fell 62 per cent. East of Rift recorded a relatively lower decline of 26 per cent.

The tea board projected Kenya's production to drop by around 16 per cent to 276 million kg, from 328 million kg recorded last year. This implies significantly lower quantity of tea for the global market as the country exports almost all its tea output.

This also means chances of a rise in offtake from India are higher and a robust demand is likely to push up the tea prices.