Iran is reported to have stopped sourcing tea from South Indian auctions. Traders attributed it to internal problems which might have prompted buyers to pause on procurement for the time being.
The emerging situation has also reduced the number of tea buyers in the auctions from Iran. The market has witnessed a declining price trend for certain grades of orthodox leaves in sale 49 of Kochi auctions, especially for good quality teas.
Coupled with the Iran imbroglio, traders are finding a subdued demand from the Russian and European markets as buyers there have already made their procurement ahead of winter. The Russian and European markets are expected to be revived from the second week of January with the arrival of fresh crop, they said.
The auctioneers Forbes, Ewart & Figgis said there was a ₹4/kg drop in the average price realisation at ₹169 in orthodox leaves compared with ₹175 in the previous week.
Stoppage of invoices
Dipak Shah, Chairman, South India Tea Exporters Association, said sentiments play a major role in the minds of both buyers and sellers.
Due to the sudden stoppage of signing the pro-forma invoices which is mandatory for Iran imports, markets have fallen for orthodox teas in North India substantially and the sentiments of showing a declining market can be seen on CTC teas also.
There is a slowdown in Europe and Russian buying to some extent which overhaul has led to reduced offtake. Moreover, it is observed also for the domestic market of a huge cash crunch and buyers prefer to buy their immediate needs only. Nevertheless, with the ensuing end of season teas in North India and lower crop due weather pattern as observed in past, there seems to be a silver lining at the end of the tunnel, he added.
In Kochi auctions, the quantity offered in orthodox leaf grades was 3,48,891 kg and the sold quantities was only 86 per cent. CTC dust market was also down with reduced demand. The average price realisation was down by ₹2 at ₹133.