Kolkata, March 7 Indian tea prices are likely to rule firm this year on an anticipated drop in production, particularly of first flush tea, following a dry spell in the North Indian estates of Assam and West Bengal, and projections of a buoyant demand in international markets .

According to industry insiders, Assam and North Bengal have hardly had any rain since October last year. This is likely to impact the production of first flush tea, plucking for which begins from mid-February and typically goes on till April.

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“It is difficult to estimate the exact crop situation at present, but the general sentiment is that the crop could be lower since there has been no rain or moisture. We will come to know the exact position in April,” Sujit Patra, Secretary, Indian Tea Association, told BusinessLine.

Estates in Assam and West Bengal produced close to 126.4 million kg (mkg) in 2022. First flush typically accounts for around 10-12 per cent of the total crop produced in these estates annually.

If the rainfall situation improves by the second week of March, the crop outlook might improve, said Kaushik Das, Vice-President, ICRA.

Tea prices at auction centres in both North and South India are marginally higher this year, as compared with the same period last year. For instance, for the week ending February 18, the price at the Kolkata auction centre was at Rs 153.26 a kg, while there was no sale of tea in the same period last year; at the Guwahati auction centre the price was at Rs 139.48 a kg (Rs 134.08 a kg); at the Cochin auction centre Rs 150.34 a kg (Rs 140.42 a kg); Conoor Rs 117.6 a kg (Rs 102.50 a kg) and Coimbatore Rs 127.83 a kg (Rs 110.92 a kg), according to Tea Board data.

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Export to support prices

The country ha sub-normal production for three consecutive years between 2020 and 2022 on the one hand, while higher export volumes led to significant tightness in pipeline stock. This is also likely to provide some support to bulk tea prices in the new season.

Exports from North India were up to about 30 mkg at 143.89 mkg valued at around ₹4,414 crore during January-December 2022 against 113.96 mkg valued at around ₹3,473 crore in the same period last year.

Sri Lanka is likely to register lower production this year as well, on the back of an economic slowdown, and Indian tea would be able to cater to markets that were earlier serviced by Sri Lanka, industry sources said. This would lead to firm demand for Indian teas in overseas markets, thereby, keeping prices firm.

India’s total exports grew by nearly 15 per cent at 226.98 mkg during January-December 2022 against 196.54 mkg in the same period last year, backed by higher demand from the Russian Federation, the CIS and UAE markets.

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