Indian tea exports fell both in volume and value terms between January and June 2020, but the declining trend between April and June further deepened in volume terms
But August auction prices of both Assam and West Bengal tea this year has shown a declining trend, fetching an average price of Rs 250 per kg.
Even as tea prices in the domestic market have gone up by an average of more than 70% over last year’s prices, the export market has been hit with price realisation down by an average 31% over last year’s realisation. There has been a low price syndrome overseas in the wake of Covid -19 with the markets choosing for cheaper variants.
Indian tea exports fell both in volume and value terms between January to June 2020 but the declining trend between April and June further deepened in volume terms though price realisation during this period was a little higher compared to the prices realised between January and March.
India’s total tea exports between January and and June were 93.93 million kg compared to 119.72 million kg exported during the same period in 2019. This naturally fetched a lower value of $ 276. 22 million or Rs 2,050.52 crore in 2020 compared to $ 385.14 million or Rs 2,698.13 crore from exports during the same period last calendar year.
Average price per kg in the export market was also down from $3.22 between January and June 2019 to $2.94 during the same period in 2020. “Indian tea couldn’t command a higher price this year in the export markets since the markets so far preferred cheap Afrian tea over Indian tea. But Darjeeling, Orthodox and second flush CTC have good interventions in the export markets,” Azam Monem, director, Mcloed Russels, said. The Tea Board however expects that there may be a price rebounce in the second half of the calendar year.
In the domestic market the July auctions fetched an average 71% higher price than the last year’s average auction price. The July auctions this year of both Assam and West Bengal tea, including Darjeeling’s, got an average price of Rs 273.50 per kg against Rs 158.98 a kg at the auctions fetched in July 2019. But August auction prices of both Assam and West Bengal tea this year has shown a declining trend, fetching an average price of Rs 250 per kg.
Though the auction price in August for tea from 13 districts of Assam fetched an average Rs 271 per kg with auction at the Sibsagar district fetching the highest price of Rs 300.54 per kg, West Bengal’s auction prices for tea from 4 districts were quite low at an average of Rs 230 per kg, which brought down the average auction price of the two states. Monem said this has been due to an increase in supply at the spot markets, though overall production has been near 25% down. June, July and August are high productivity months and production in these months have increased supplies in the spot markets to some extend.
The lock down period lost 120 million kg of production and thereafter the floods in Assam triggered a loss of around 60 million kg. The industry expected that productions during June, July and August would offset production loss by 40 million kg but Monem finds 10-12% loss in production of Assam tea in September alone. He said, “production loss means loss in net cash flow but the loss can be made up if the trend of high prices continue.”
Just in a month’s gap average auction price fell by Rs 22.50. “So it has to be watched where the price finally settles,” said Monem. Vivek Goenka, president, Warren Tea, opined, with both fall in production and prices, the market is extremely volatile but it still hopes to be in profit when the year ends.