Tea stocks to decline by 2005

The Indian Tea Association (ITA) status paper indicates, at the end of 2004 cumulative stock in the pipeline will be almost exhausted, which augurs well on the price front.

ITA has projected a production of 830 million kg at the end of 2004 and imports of 25 million kg, taking total availability to 855 million kg.

Exports would be around 190 million kg and consumption was expected to be in the region of 710 million kg, which implies a total absorption of 900 million kg.

The association believes that lowering of stocks would have a positive impact on prices. On the global supply side, all countries in the current year, barring Kenya, have registered lower crop.

The ITA expects that if the current trend continued, the Indian tea industry would perform well on the price front during 2004.However, ITA has cautioned, no tea should be allowed to be sold below three per cent of its valuation.

According to records, the first few months of the year had the best of combinations with lower production, lower stocks, higher exports and better prices.

Due to adverse weather conditions, the industry registered lower crop since the beginning of 2004. The shortfall during January to June was to the tune of 34 million kg, as compared to the previous year and it was unlikely that the shortfall would be adjusted.

The situation was significantly different from the previous year's, which could pass off as one of the worst years for the industry.

During 2003, India registered production of 857 million kg, an increase of 31 million kg, while exports were down by 28 million kg. Consumption increased only 1.8 per cent and kept prices under pressure.

However, towards the end of 2003, prices showed some improvement due to lower availability of crop and higher exports. Finally average prices settled at a level marginally higher than 2002.