Tea prices are likely to come under pressure because of higher production in all major tea producing countries and buyers opting to keep their stocks at low levels at the fag end of the fiscal year.
Auction prices have moved down a tad which has helped in reviving the exports in January. Major buyers have cut down their consumption to the bare minimum and exporters are looking for lower rate tea, traders said. Production in January was up by 25% with South India’s contribution rising by almost 60%. According to Tea Board figures, India?s total tea production for January was at 27.1 million kg as against 21.6 million kg during the same month last year.
Total tea production in South India was 18.4 million kg as against 11.4 million kg a year ago. In North India production fell down marginally to 8.7 million kg as against 10.12 million kg last year. Good rains during October and November in the southern states helped in higher production, sources said. Tea production season was also extended in most estates because of high prices, sources added.
Globally, Kenyan tea production moved up by 47% in January while production increased by 50% in Sri Lanka putting pressure on global tea prices. This was reflected in the auctions in India, where average realisation dropped by 8% in three weeks in January. For the week ending January 2, average price for all tea stood at Rs 102.29 per kg, while for the week ending January 23, the average price for 1 kg of tea came down to Rs 94.06.