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Tea prices, which have been on an upswing since the beginning of this fiscal, are likely to firm up further by the end of March when the first flush crop starts arriving in the market.
Tea prices have already inched up by ₹12-14 a kg since the beginning of FY-18 on the back of a drop in production of North Indian tea and a steady export demand from markets such as Kenya.
Average selling price of orthodox tea is ruling at around ₹167.28 a kg, higher by nearly ₹14.88 a kg compared to the same period last year, said J Kalyan Sundaram, Secretary-General, CTTA.
Shortages likely
According to KK Baheti, Chief Financial Officer, McLeod Russel India, the carry forward stocks are likely to be lower which could lead to shortages in the market in March.
It is to be noted that the first flush tea or the new season tea begins to arrive only by mid-March or early April.
“Prices are up by ₹14-15 a kg at present, carry forward stock is low, so our estimate is that the opening level will be strong and could be higher by around ₹20 a kg,” Baheti told BusinessLine .
CTTA plans to drop two sales due to lower offerings.
Exports up 8%
As per data available with the Tea Board of India, productionin North India dipped by nearly 46 million kg (mkg) to 997 mkg during the April-December 2017 period compared with 1043 mkg in the same period in 2016.
The country’s provisional tea exports during April-December 2017 period stood at 180 mkg compared with 167 mkg in the same period last year, an increase of nearly 8 per cent, the Tea Board data suggested.
Higher exports was primarily supported by a crop- loss resulting in lower production in Kenya.
Tea prices are expected to firm up once the new crop starts arriving, said DP Maheshwari, MD, Jay Shree Tea.
Wage talks
However, the industry is awaiting to understand the likely impact of the proposed wage negotiation.
“The market is showing good activity, the demand is better, but unless we get to know what steps are being taken on wage negotiation it is difficult to understand the impact,” said Jagjeet Kandal, Managing Director, Amalgamated Plantations.
Negotiations for a wage hike for tea garden workers in Assam and West Bengal, which is due from January, is expected to begin soon.
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