The Iran-Israel conflict has put tea exporters in auctions in a fix as they fear of some adverse impact in shipments to Iran if the situation worsens further.
A leading tea exporter in South India told businessline that “it is too early to say anything on the current situation, but there could be some effect by way of reduced purchase”. Iran buyers used to procure 30-35 million kg (mkg) of orthodox tea on a yearly basis mostly from North India.
Lakshmanan Chettiar, an orthodox tea exporter in Coonoor, said Iran is buying lot of tea from South India and Sri Lanka. But Sri Lankan tea is expensive now due to shortage of the brew as their production was down by 30 per cent. Naturally, the next choice for Iran buyers is Kochi auctions to procure more quantities. However, it is too early to predict and a clear situation will emerge within one or two auctions in India, he said.
The Indian tea exports to Middle East, Iran, Iraq and the UAE is almost 40 per cent and another 20 per cent is to CIS countries. The latest developments between Israel and Iran will not only hit the shipments but also to countries that use the Red Sea and Suez Canal for their trade.
Domestic CTC prices in April and May have significantly dropped compared to January-March quarter. However, orthodox market with support of exporters has been holding on. The present developments will have an adverse impact for the Indian tea industry, said Cherian M George, Chief Executive and Wholetime Director, SBUB, Harrisons Malayalam Ltd.
Prices down at auctions
Meanwhile, the orthodox leaf prices has dropped by ₹8 per kg in sale 24 of Kochi auctionsand the traders attributed the decline to fresh crop arrivals in North India in the second flush season. The arrivals would be more in the coming weeks which will cause further downward price corrections in the market.
The auctioneers Forbes, Ewart & Figgis said the offered quantity was 2,76,241 kg with a sales percentage of 88. Whole leaf and brokens was lower by longer margins of ₹5-10 a kg and sometimes more, witnessing heavy withdrawals. Clean, black, well-made medium whole leaf and brokens barely remained steady and tended to ease. Exporters to CIS and Middle East were active.
The market witnessed a less demand for CTC leaf with 52 per cent sales out of the offered quantity of 45,000 kg. Kerala and upcountry buyers were selective, while the export demand was subdued.
CTC dust market was steady to firm and sometimes dearer, while prices of plainer teas ruled lower with heavy withdrawals due to lack of bid. Blenders together absorbed 63 per cent of the offered quantity of 6,87,344 kg. There was some export enquiry at the bottom of the market.
Orthodox dust market was firm to dearer with a 68 per cent sales out of the offered quantity of 13,500 kg. Exporters and upcountry buyers were the main stakeholders.