| Date: |
24-03-2015 |
| Subject: |
Indian tea prices likely to rise on global short supply |
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Global shortfall of nearly 8 million kg (mkg) in January is likely to push up Indian tea prices, traders said. Tea production in India is seen lower by 1 mkg in January and anticipated to be lower in the first quarter.
Tea prices in India are trading above the last year’s average due to sluggish demand. India is a leading producer of black tea in the world with an approximate annual production of 1100-1200 mkg.
“All major producers in the world are facing supply crisis. Kenyan production is short by 3.37 million kg in January and the trend is same in February and March. The tea prices have moved up in Kenya by almost R25 per kg. Indian market has not factored in the shortfall as buyers are keeping a low inventory as fiscal year is ending,” N Sriram, president of Global Tea Brokers, told FE. He added that the market was likely to move up after March in India.
R Sanjith, head (commodities), United Planters Association of Southern India (UPASI), said that Indian tea prices are currently higher than last year’s average but likely to move up on the short supply. “Indian tea supply is anticipated to be short by 6 million kg in the first quarter with North Indian production seen lower.
South Indian production would be more or less similar to last year. Kenya is likely to stay short unless it rains,” he said.
Lower production in Kenya helps the South Indian tea industry export more CTC due to its predominance production. India exports the CTC (crush, tear, curl) tea variety mainly to Egypt, Pakistan and the United Kingdom, and the premium orthodox variety to Iraq, Iran and Russia.
Sriram is doubtful of Indian production recouping the shortfall during the year and expects the Orthodox tea to do extremely well in the year.
“Last two years the tea supply was seen higher with 2013 being a bumper crop year. The shortfall in 2015 is likely to be factored in by the market,” Sanjith said.
India’s tea production in 2014 stands at 1,185 mkg, compared with 1,200 mkg in 2013.
Source : financialexpress.com
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