Dwindling supply of tea has led to cancellation of at least five auction sales for the month of March.
Industry sources said, two sales have been cancelled at Guwahati, two at Kolkata and one at Siliguri. Moreover, with the weather playing truant this year as well, there appears to be no let-up in the supply scenario.
At present, prices at auctions were hovering at Rs 110-130 a kg for Assam, an increase of Rs 15 a kg over the same period last year. The industry expects the new season to open at Rs 140-150 a kg, which would be higher by Rs 20 a kg over the previous year.
| MIXED BAG | |||||
| Country | Jan to | 2009 | 2008 | +/- | % |
| India | Dec | 979.00 | 980.80 | -1.80 | -0.20 |
| Bangladesh | Dec | 59.20 | 58.70 | 0.60 | 1.00 |
| Kenya | Dec | 314.20 | 345.80 | -31.60 | -9.10 |
| Indonesia | Nov | 70.20 | 72.10 | -1.90 | -2.60 |
| Malawi | Dec | 52.50 | 41.60 | 10.90 | 26.20 |
| Sri Lanka | Dec | 289.70 | 318.60 | -28.90 | -9.10 |
| Tanzania | Oct | 25.20 | 26.20 | -1.10 | -4.00 |
| Zimbabwe | Oct | 8.80 | 7.69 | 1.10 | 14.80 |
| Uganda | Nov | 40.00 | 40.95 | -0.90 | -2.20 |
| Total | 1838.90 | 1892.50 | -53.60 | -2.80 | |
While production has remained at almost the same level as last year, consumption grew by 30 million kg and the season started with a shortfall of 25 million kg. Industry sources estimate the deficit to be about 47 million kg due to lower exports and higher imports.
According to the Indian Tea Association (ITA) figures, during January-December the production stood at 978 million kg compared with 980 million kg in the same period previous year.
Aditya Khaitan, ITA chairman said, "With the current dry spell in north India, if it did not rain immediately then the current inventories would be over by the second week of March. The new season tea is not expected before April in the current circumstances."
Assam has not had rain in the past four-five months while Dooars has been dry as well. Industry sources said, “It should have rained by February 15.”
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Allaying fears, Tea Board of India chairman, Basudeb Banerjee said, “We are in a shortage market, but not a panic-stricken market.” Tea has 1 per centage weight in the whole sale price index (WPI).
However he cautioned that all eyes were on rain in Kenya and Assam. “If it doesn’t rain in Kenya in the next 10 days, it will have an impact on the sentiment,” Banerjee pointed out.
Kenya’s production during January-December was down by a little more than nine per cent, while exports declined by more than 10 per cent. World tea production during year suffered a major setback with a drop of about 2.8 per cent of 53.6 million kg.