Tea outlook remains bullish.

The outlook for tea is quite bullish with the commodity setting new records in price in the domestic as well as export markets. Prices of north Indian tea, which consists of 75% of the country’s tea production of 980 million kg, are on the rise. The auction prices of tea in Kol-kata is higher by about `23 per kg across all categories — CTC, orthodox and Darjeeling. The average price of tea has shot up to ` 151.72 per kg as compared to `128.53 per kg in the same period previous year. The crop shortfall in June in upper Assam has pushed up prices at auctions. The auction price at Siliguri auction centre last week was up by `4 kg. The price at Guwahati auction centre has shot up by `8 per kg.

Production shortfall

While during May 2010 north India (Assam and West Bengal) witnessed 3 million kg decline in crop against the corresponding period last year, June has seen the maximum loss in crop in both Assam and West Bengal. As per tea statistics released by Tea Board, tea produc-tion during June has declined by 13 million kg in Assam and 2 million kg in West Bengal, resulting in an overall decline of 15 million kg in north India. Tea estates in Assam have also reported that production in July has also been adversely impacted due to continuing heavy rains and the slow recovery of estates from the severe helopeltis pest attack seen during the May-June period. The total crop produced by tea estates of north India during the January-June period is 212 million kg compared to 222 million kg in the corresponding period of 2009. However, the south Indian production is up by 15 million kg to 127 million kg in the same period.

Arrivals normal

Arrivals at the north Indian auction centres are at par with that of last year. However, since the orthodox tea production has gone up this year, arrivals of orthodox tea at the Kolkata auction is up by 2.4 million kg. Total quantity sold through the Kolkata auction is 70 million kg in the January-June period this year compared to 64 million kg in the same period last year. Guwahati sold 55 million kg in the same period as against 58 million kg last year. Domestic consumption is growing at a rate of 3-3.5% annually. Therefore, the demand for tea will remain high.

Exports to remain bright

Indian tea exports have registered an increase of 9 million kg during the January-June period vis-a-vis last year. While the exports from north India have declined by 2 million kg, unit price realisation has seen an increase of `7 per kg. Exports from south India have increased by 12 million kg but with lower unit price realisation. Overall, during January to June 2010, total exports from India have registered 84 million kg with a forex earning of `1,036 crore as against 75 million kg last year.

Source : economictimes.indiatimes.com