Tea prices to lean on exports

A production shortfall is building up in the tea industry but the strength of the market will depend on export performance.

During January-September 2007, production in north India stood at 528,137 thousand kgs, down by 13,348 thousand kgs while it was 161,126 thousand kgs in the south, a decline of 4,186 thousand kgs.

Overall production in the country saw a dip of 17,534 thousand kgs.

Aditya Khaitan, chairman, Indian Tea Association and managing director, McLeod Russel India said, "If there is a shortfall in production and consumption growth were to be maintained, the new season will begin with firmer prices even though the dip in exports, due to rupee appreciation, will bridge the demand-supply gap."

A glance at the all-India export figures show that exports during the same period were down by 37,159 thousand kgs.

The unit price of all-India exports was higher at Rs 98.60 as against Rs 91.56 over the same period last year.

Export prices in the north, however, suffered a dip. The unit price of north Indian tea exports stood at Rs 117.01 a kg as against Rs 124.44 last year.

In September alone, all-India exports took a hit of 4,836 thousand kgs. The unit price of exports was at Rs 101.67 a kg as compared with Rs 99.58 a kg last year during the month.

"The prospects in the second half of the year look much stronger than the first half," Khaitan said. For McLeod, which happens to be the world's largest bulk tea producer, prices in the new season could be higher by Rs 10 a kg over the same period last year, if the rupee appreciation did not act as a dampener.

However, as of now, sales at auctions are showing strength. "Every week, prices were getting stronger," Khaitan said.

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WEAK BREW

Prices in the domestic contingent on exports due to the deficit in tea output

During January-September 2007, tea output down by 17,534 thousand kgs

Frail exports may help stabilise prices in the local market

Exports during the period also dipped by 4,836 thousand kgs because of higher prices