KOLKATA: Tea prices are likely to remain depressed in the first quarter of 2017, weighed by carryover stocks and lower demand from retailers in rural India post demonetisation. Planters and traders expect prices to witness some recovery from April, when the new season tea will arrive in the market.
Production of tea has been higher this year from last year when a long dry spell had affected output. According to Tea Board figures, production between January and October was 1,049 million kg, compared with 1,040 million kg in the first 10 months of 2015. Last year, India produced 1,208 million kg.
“Though the November production figures are yet to come, reports from Assam and Dooars indicate a good crop due to favourable weath er. Even some gardens have produced tea in December, too. So the crop will be higher in 2016,“ said Azam Monem, chairman of the Indian Tea Association.
“But the offtake from rural India has declined because of cash shortage. Retailers and distributors who operate in rural areas are not picking up tea as they are yet to get adjusted to online transactions and cheque payments.“
Monem, who is also a director of McLeod Russel IndiaBSE -0.39 % that owns several tea estates, said he expects movement of tea in rural India to accelerate from April. The average auction price of tea had improved nearly 4% during January-November this year.
Sujit Patra, secretary of the Indian Tea Association, said barring Iran, no other country recorded higher imports of Indian tea in 2016. In 2015, India had exported 229 million kg of tea. “We are not ex pecting to touch this figure this year,“ he said. “From January to October, India exported 174 million kg of tea compared to 178 million kg exported in the same period last year.“ Kenyan tea has given tough competition to Indian tea in global markets. As a result, the unit realisation has dropped o $2.96 per kg for Indian tea from $2.98 last year.
Exports to Russia, one of the key markets for Indian tea, have not been as good as expected.
Source: economictimes.indiatimes.com