Tea producing companies with dual manufacturing facilities are reported to have shifted to orthodox leaf production to cater to the rising export demand.
This is evident in the offerings of orthodox tea varieties in sale 21 of auctions at Kochi which stood at 4,16,456 kg. A trading source said the market conditions are now in favour of orthodox tea exports, especially from South India, in view of the crisis in Sri Lanka. The future offerings in orthodox grades in the coming auctions also indicate an increase in arrivals.
Earlier, producing companies had focused on CTC dust on rising domestic demand. But it seems that there is a shift towards orthodox, thanks to rising export demand, the sources added.
85 per cent of offerings sold
The auctioneers Forbes, Ewart & Figgis said 85 per cent of the offered quantity of 4,16,456 kg in orthodox grades was sold this week with exports mainly to CIS and West Asian countries. Strong export demand was also forthcoming for orthodox leaf.
A leading trader said the current bottlenecks in Sri Lanka seem to have forced overseas buyers to focus on Kochi auctions as the total value of exports stood at approximately ₹5 crore at an average price of ₹170.56 per kg this week. A single exporter has bought over one lakh kg at a value of over ₹2 crore for buyers in Russia, Turkey, Iraq, etc.
However, Sri Lankan exporters have ruled out any crisis in the tea industry there, saying that operations are normal in tea gardens despite initial disruptions. Considering tea as a major export revenue earner, the government has also prioritised the tea sector to increase shipments to garner more foreign exchange earnings.
Nathaniel Umesh, General Manager, Sunshine Tea (Pvt) Ltd, a tea export company in Sri Lanka, told BusinessLine over the phone from Colombo that overseas buyers are still active in the auctions, but currently prices are ruling lower which is a normal phenomenon during May-June period due to the onset of monsoon.
Asked about the switching over of buyers to South Indian auctions, he said the demand is mainly for low-grown orthodox tea leaves as its prices in Sri Lanka went up this year by about 40-50 per cent because of lower crop. This particular tea is an expensive one and is in high demand in West Asian markets. As Ceylon teas are very different in quality to other origins, and particularly South India, it is difficult to see buyers switching.