A new record was created in the auctions of Coonoor Tea Trade Association (CTTA) at Sale No: 4 on Friday with the average price crossing ₹100/kg mark for the first time in three years.
For the first time in the history of the 53 year-old Association, average prices crossed ₹100/kg mark in 2013 reaching ₹104.11 at Sale No: 10 on March 8. This level continued to remain unbeaten in any of the auctions held in subsequent weeks all through 2013, 2014 and 2015.
Since the last quarter of 2015, prices have been rising due to an increase in demand and 2016 opened with the average price ruling ₹90.41a kg.
This rose to ₹95.14 in the next auction and further to ₹97.05 last week. Now, at the fourth auction for 2016, prices have averaged ₹102.88/kg. This time last year, average price was only ₹78.78/kg.
Dipping prices “This is a welcome development because we have been suffering from lower prices last couple of years. Prices have risen to this high level as there is shortage of tea in North India where auctions have been cancelled for some six weeks and factories are closed for want of leaves for processing. We are seeing increased demand from upcountry buyers pushing up the prices. We expect the market to remain buoyant at least till March end because volumes of North Indian tea are not expected to hit the market till then,” CTTA Chairman LC Singhania told BusinessLine .
Output worries However, the low volume on offer is causing concern to the manufacturers.
“Prices are no doubt good but the volume offered this week was the least in two years. Factories do not have green leaf for processing and are working only for four days a week and that too in single shifts. Our production has fallen by 60 per cent and to that extent, our realisation has also crashed despite average prices crossing ₹100/kg. We are also concerned that the demand for our top quality high-grown winter teas is inadequate at high bids. We are waiting for prices for these teas to rise by at least ₹20 more than the current levels,” Ramesh Bhojarajan, President, The Nilgiris Bought Leaf Tea Manufacturers’ Association, said.
Frost damage “We are also worried that there is less of tea leaf for harvest. Frost in some fields and the continuous mist for most part of this winter has affected the healthy growth of the tea bushes. Although the higher price at the auction may lead to increase in the price of our green leaf purchased by factories, the take-home money for us will be less because of low volume supplied by us”, H Thiagarajan, President, Nilgiris Small Tea Growers’ Association, said.
At Sale No: 4 this week, despite the prices rising to new high, 91 per cent of the offer of was bought due to increased demand but because of low offer, the overall realisation crashed to ₹6.77 crore – the least since April 2, 2015.