The Hindu Business Line : Tea prices to look up on winter demand from importers

Chennai, Nov. 6 Tea prices, which declined by Rs 20 a kg in the last couple of weeks, are expected to gather steam again from this month-end on demand for winter emerging from key importers.

“For example, prices for crushed tear curled pekoe fannings have declined to Rs 85 a kg from Rs 105 witnessed during September. But they are expected to recover by end of this month,” said Mr Madan Prakash Murghasan, Director of Exim Rajathi India Pvt Ltd. The Chennai-based company is one of the largest exporters of tea to Pakistan.

“No doubt, the economic slowdown and global markets crash have affected demand a little. Also, the fasting during Ramadan had an effect on purchases by buyers abroad. But prices are expected to stabilise soon,” he said.

Last week, prices at tea auctions in Coonoor, Coimbatore and Kochi crashed. In Coonoor, the price crash was one that had not been witnessed anytime in the recent past and the bulk of offers at the auctions had to go unsold as importers were unwilling to pay higher prices demanded by the sellers/growers.

Export speculations

The Tea Board and bodies such as the United Planters’ Association of Southern India are still betting on exports touching about 210 million kg (mkg) this year.

A decline in Kenyan production and demand from markets such as Egypt, Russia and Pakistan has helped shore up exports this year.

“We are expecting a pick up in demand from Afghanistan, Iraq and Russia,” Mr Madan said.

Meanwhile, data available from Tea Board show exports increasing 15.45 mkg during January-September to 139.91 mkg compared with the same period a year ago.

However, it showed that for the first time this year, exports dropped. Shipments from the country were down 1.95 mkg to 15.87 mkg against September 2007.

Production

September also saw a 6.2 mkg drop in production. This was mainly due to a 7.9 mkg fall in output in North India, while the decline was partially made up by a 1.7 mkg increase in South India.

Production in September was down to 107 mkg from 113.2 mkg last year. Overall production during January-September was up at 706.7 mkg from 689.2 mkg during the same period a year ago.

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