Tea prices firm on global demand, lower output

For the moment, the trouble in Egypt does not seem to have had much of an impact on India's tea exports.

Although it is too early to comment, sources in the trade said that the democracy movement in Egypt was brief and successful and should not prove to be a major hindrance to India's tea exports.

The buoyancy in global tea demand, and lower production in India have ensured that the domestic prices have recovered and is holding firm. The unit price for tea exports in December was Rs 146 a kg as against Rs 140 a kg last year.

However, there was a significant fall in the volume of tea exports which pulled down the value realisation. After several months of good production and subdued prices during the early part of 2010, the domestic prices began to recover only in the latter part of the year as production slumped.

Tea production in December was a shade lower at 58.74 million kg as against 58.10 million kg last year. But for the year as a whole production was down 12 million kg to 966.40 million kg. Production from North India accounted for the bulk of the fall at 11.83 million kg. Production shortfall from South India was nominal and was of recent origin.

Much of the earlier shortfall in North Indian production was made up by increased production from South India. While production from North Indian plantations have recovered and stabilised, it is the South Indian production that is currently showing a declining trend. The trends are continuing into December when South India showed a 3.16 million kg fall in production while North India recorded a 3.80 million kg growth.

The falling production trends are likely to be sustained into January as well, sources in the United Planters Association of Southern India said.

The late rains and cloudy conditions had hampered production in South India during the last three months. Although the rains and cloudy conditions had abated over South India during the early part of the year, no production forecasts were forthcoming for February. The climate in Nilgiris in February has been cold nights and dry and sunny during day.

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