South Indian Tea Prices Soar 3-5% per Kg on Local Demand.

KOCHI: The south Indian tea industry is increasingly catering to the domestic market as exports face uncertainty. Premium crush-tear-curl teas consumed by the local market are fetching good prices. The prices of CTC dust teas in the south Indian market have jumped by Rs 3-5 per kg supported by robust internal demand. Prices touched Rs 93.5 per kilogramme with premium varieties edging closer to Rs 100 per kg.

A lower production and higher internal demand have pushed up the prices. "Up to July, tea production in south India was down by 3.6 million kg. In August it is expected to slide by another 1.2 to 1.5 million kg and the sluggish trend has been continuing in September as well,'' said R Sanjith, head of commodities of United Planters' Association of Southern India.

The industry is expecting the production to improve by the end of October provided there are mild rains and sunny weather. "The quality will also improve by November with the change in weather. This could see the prices moving up further. But for the short term, the current price levels should hold steady," said a leading tea broker.

Plantation companies such as Harrisons Malayalam have benefited by the improved prices. HML has recently launched premium bulk teas in auctions from specific regions in south India. "Our recent brand Moongalaar Gold is doing well in the market fetching prices in the range of Rs 95-100 per kg," said Pankaj Kapoor, MD of HML.

Strong internal demand has kept prices buoyant as south Indian exports are facing rough weather. South Indian tea exports in the January-July 2011 period at 42.5 million kg were lower by 12 million kg compared with the same period in the previous year. "The offtake from Pakistan, was poor because of high Indian prices. Pakistan buys mostly from Kenya. Since Kenyan production was down, India should have benefited more," said exporter Krishnakumar J Shah.

Source : economictimes.indiatimes.com