The Hindu Business Line : Tea prices dip on tech correction

Tea exporters seem to be not ready to keep pace with the spiralling rise in prices this week. Though they did not openly admit it, they, however, stayed away from participating in the trade on Thursday.

Tea prices, which soared in the last couple of weeks, recorded a dip of Rs 3 to Rs 4 a kg at opening. The sellers started pulling out the lots as they were not quite willing to give in to the slide. The better liquoring teas, however, ruled firm to dearer by Rs 1 to Rs 2 /kg.

The trend continued on a dull note. Internal buyers remained active, but only 60 per cent of the offered quantity was sold

Market sources attribute the price dip to a technical correction. "The prices had shot up to unrealistic levels. A steady rise of Rs 3-4 a kg (in the weekly sale) is justifiable. Last week, it increased by Rs 8-12/kg and in the earlier week, it was up by Rs 10/kg. We were sure that this spiralling trend would not last. In fact, we are expecting the price levels to go down further. But this is only a correction," a broker said, preferring anonymity.

Industry sources expect the price to slip by a minimum of Rs 5-8 a kg from the current levels.

While exporters have (in the last two sale) been busy catering to the demand from Pakistan and Kenya, industry sources state that the price trigger could have been because of their commitment for immediate shipment.

They expect the market to bounce back very soon, because of the anticipated shortfall in production vis-à-vis the demand.

P.S. Sundar reports: Only 7.4 lakh kg of teas were catalogued for the auctions this week. This is the lowest volume so far for the year.

This is nearly three lakh kg lower than the corresponding sale of last year. This marks a reduction in the offerings to the tune of 30 per cent.