Traders panic as speculative buying in tea continues
Nandini Goswami
Calcutta, Dec 29: Tea prices have increased phenomenally over the last few weeks and the market is suspecting speculative buying by vested interests. This has created a panic among tea traders, who are worried that the crop might become unavailable altogether.Sources in the industry say that speculative buying has created an artificial scarcity, pushing up prices steadily. "There is no reason to panic and resort to speculative buying as crop prospects in south have been much better this season, which is expected to enhance supplies," said an industry analyst. It is believed that the Tea Board is looking into this issue and will be taking strong measures to stop speculative buying. The board has promised to check the rise in prices and adopt a strict auction monitoring system. The tea traders, who were in a state of panic due to rising prices, have now accepted the fact that price movements are guided by market forces. "However, what concerns the traders more today is the availability of teas rather
than the increase in prices of teas," said one of them. The industry analyst said, "there would be no justification for speculative buying as prices have already touched an all-time high this season." Ordinary Dooars tea has shot up by Rs 15 per kg in a single week. The ruling price now is Rs 104 per kg, which is more than double the price (Rs 45-48) in the same period last year. Some traders said that a global shortage might push up prices by 10 to 15 per cent at most. However, the all-India price of CTC Assams was in the range of Rs 90 to 100 this year compared to Rs 49.79 last year. Brokers, however, claim that availability of tea is declining owing to increasing exports in the last few months. Exports have been higher by over 27 million kg up to the end of October. Although production increased by 27 million kg up to the end of October, this was neutralised by an equivalent rise in exports this year. The price rise has proved costly for tea traders as they could not pass on any price increase to
the consumers. This, in a way, has put pressure on their margins. A regular end-price increase might prove costly as tea might lose its image as a cheap common man's beverage, the analyst added. With regular price increases, the tea trading community fears a shortage from January to April. Moreover, rising exports would leave little of the crop for domestic consumption and it remains to be verified whether it will be available to packet tea companies for distribution in the domestic markets, added the analyst. It is believed that in most auction houses stocks have depleted except for a few orthodox varieties. There were short supplies for all varieties in Calcutta auctions, whereas the Guwahati auction house is believed to have almost finished its stock of CTC varieties.
Copyright © 1997 Indian Express Newspapers (Bombay) Ltd.
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