Tea prices in North to rule firm on low stocks, better quality

Prices of teas in North India are likely to open firm this year due to low carryover stock and an anticipated improvement in quality of leaves produced.

Average prices of end-season tea is currently ruling around ₹5-15 a kg higher across various auction centres in North India.

According to statistics available on the Tea Board of India website, for the week ending February 9, tea prices were ruling at ₹124.27 a kg (₹119.08) in Kolkata auction centre; ₹120.36 a kg (₹104.53) in Guwahati and ₹115.83 a kg (₹103.48) in Siliguri.

“The end season teas are now getting over. Good quality teas have been selling at a phenomenal price which is an indication that quality teas will fetch a good price this year,” said Azam Monem, Wholetime Director of McLeod Russel.

Whatever teas that are remaining will get over by end-February, so there will be very negligible amount of carryover stock into the new season. So the first flush, which will come into the market in April, will command a better price, sources said.

Tea Board directive

According to the Tea Board statistics, production was marginally higher at 1,165.47 million kg (mkg) during April-November period this year as against 1,161.46 mkg last year due to stable weather condition in tea growing areas. However, production in December is estimated to be lower by around 20 mkg following the early closure directive by the Board.

The Tea Board had, in October this year, directed tea gardens not to carry out plucking beyond December 10, in order to reduce the quantity of substandard teas. Tea gardens usually carry out plucking activities almost till the end of December leading to an increased supply of poor quality leaves. Such teas exert pressure on prices.

According to Vivek Goenka, Chairman, Indian Tea Association, the early closure of gardens will allow estates to take up pruning work in a planned manner and lead to production of better quality of teas at the beginning of next season, which begins in March. This will also help in better price discovery.

Higher Kenya output

However, higher production of Kenyan tea is likely to exert pressure on prices here. Production of Kenyan tea is seen higher by around 50-60 mkg this year.

Since India and Kenya share some common export markets, lower prices of Kenyan tea there may exert pressure on Indian tea realisations.

“This is a worrying sign. However, on the domestic front, we can expect quality of tea to be better and hence command a better price,” Goenka said.

For the calendar year 2018, India’s tea exports decreased marginally to 249.11 million kg from 251.91 million kg exported in the previous year, Tea Board data showed.

However, the provisional data put exports in value terms up by about 3 per cent to around ₹5,132 crore in 2018 as against ₹4,988 crore in the year-ago period.

Exports to Pakistan and China went up, while shipments to Germany, the UK and CIS countries were down in volume terms, the data suggested.

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