Tea prices dip on low exports, high output

Written by Rajesh Ravi | Kochi | Updated: Jan 30 2010, 03:33am hrs
Tea prices are under pressure due to low exports and good production in the last quarter of 2009.

Auction prices at most centres are under strain and have eased with arrivals rising sharply compared to the demand. Prices in 2010 could come under pressure with carryover stocks seen higher and production looking good in south and north .

Arrivals at auction centres are six times the normal level. Prices are under strain and could ease with carryover stocks for the current year on the higher side, N Sriram of Contemporary Tea Auctioneers said. Reports of severe tea shortage in most producing countries in 2009 prompted most plantations and small holders to hold back some stock. And now they are releasing it, N Sriram said.

Tea production was extended in most estates because of high prices, he added. Sriram estimates that production in 2009 will be higher than the 981 million kg achieved in 2008 with good arrivals reported in December.

The cumulative shortfall in tea output for the first eleven months (January-November) of 2009 stood at 2 million kilogram according to figures of the Tea Board. Anamalai and Munnar had good production in December due to good rains in November. The total production for 2009 would be higher by 3-5 million kg from the production of 2008, he said.

Fewer exports in 2009 have put pressure on prices. Kenya and Sri Lanka have reported good crop in the current year adding to the pressure, Paulose Joseph of Forbes Ewarts and Figgis told FE.

Indian tea exports during January-November 2009 stood at 169 million kg as against 186 million kg during the same period of 2008.

Exports touched 196 million kg in 2008 as against 179 million kg in 2007. Production in the current year is also likely to be on the higher side with rains and conducive weather in most part of the tea producing regions, Sriram said.