The Hindu Business Line : Stronger rupee likely to hit tea exports in H2

Chennai/Kochi, July 11 Tea exports during the second half of the year are likely to be affected as exporters have been reluctant in signing new orders in view of a stronger rupee.

“Exports of tea this year could be around last year’s level but the second half could witness fluctuations in view of the rupee gaining against the dollar. Some of the exporters have suffered losses in view of the gains made by the rupee since the beginning of the year,” said plantation industry sources.

Dollar price

Whatever was exported during the first half was mostly based on contracts that could have been signed last year, when the rupee was ruling at over 43 to the dollar. Currently, the rupee is ruling at around 40.4 against the dollar and since tea prices in terms of the dollar are ruling at the same level, exporters may not be keen on signing new contracts, according to the sources.

In fact, the rupee affected exports in May itself with shipments from the country dropping to 9.29 million kg (mkg) from 14.07 mkg during the same period a year ago. For this year, an export target of 210 mkg has been set against last year’s export of 203 mkg.

Slack from start

Between January and May, exports totalled 62.29 mkg against 67.85 mkg during the year ago period. Except March, when the shipments witnessed a rise of 5.37 mkg to 19.16 mkg, exports have been generally lagging behind this year.

Though exports are likely to be around the same level as last year, the industry sees internal demand supporting the prices.

Meanwhile, South Indian tea prices during January–May increased to Rs 73.74 a kg from Rs 65.34 a year ago. North Indian prices were at Rs 117.74 a kg compared with Rs 110.85, while the all-India price was at Rs 94.97 against Rs 84.10, UPASI sources told Business Line.

The sources also said the total loss on account of the rupee’s appreciation was yet to be worked out.

Kenyan output

Besides this, Kenyan production recovered during January – May and almost crossed the level witnessed the whole of last year, when the crop was affected by drought. Availability from Kenya, a major competitor, at competitive prices also affected the South Indian exports, they said. However, production in Sri Lanka declined 18 mkg in May 2007, they said.

South Indian exports stood at 32.2 mkg against 39.7 mkg. North Indian exports increased during this period to 30.1 mkg from 28.1 mkg.

Unfavourable weather

Severe drought conditions and other unfavourable weather conditions early this year pushed down the tea output in South India by 4.3 million kg to 85.7 mkg during January–May period from 90 mkg .

Production in Kerala dropped to 24.6 mkg from 29.2 mkg . In Tamil Nadu, the output has shown a marginal increase from 58.8 mkg to 59 mkg , similarly in Karnataka it moved up by 2 mkg to 2.1 mkg .

Overall production in the country during January-May was 226.4 mkg against 225.9 mkg a year ago. In the North, the output increased to 140.7 mkg against 135.9 mkg.

More Stories on : Exports & Imports | Tea | Forex

Article E-Mail :: Comment :: Syndication :: Printer Friendly Page