May 31: An increase in production globally, particularly a bumper Kenyan crop may be a dampener to Indian tea prices. India's own production at increased levels coupled with an over-production of tea has led to a slackening of tea prices off late.There has been a world-wide increase in the tea crop. The Kenyan crop is up by over 42 million kgs in the period January to March this year. It is estimated to cross the 55-million kg mark in April, the figures of which are yet to be received.
Other countries including Sri Lanka have been up by 5.5 million kg over last year's figures. Other countries like Indonesia and Iran are believed to have had a bumper crop upto now. Smaller producers like Malawi and Bangladesh have also registered marginal increases.
In an interview with The Financial Express, PK Sen, chairman and managing director of J Thomas, the world's largest tea broking firm, said, "tea prices have indeed witnessed declining trends offlate, but essentially have remained higher than lastyear's levels during the corresponding period".
Essentially, the decline is perceived if witnessed at the backdrop of the prices in November and December, he said. The January to March level of prices this year have been Rs 88.21 per kg compared to Rs 51.80 in 1996, an increase of Rs 36.41.
According to Sen, "the market is expected to be able to hold on prices to similar levels upto October atleast, after which they might fall. But selling of higher quantities in the first few months will cushion the fall later on".
Better teas may fetch higher prices in the months to come. This is more so because the second flush teas have a better keeping quality compared to the first flush teas, added Sen.
The all-India crop was 81.5 million kgs upto March this year, which is estimated to be higher by 27.4 mkgs over the corresponding period last year.Industry watchers have to say that it is unlikely that prices of tea may cross the November-December mark of 1997, keeping in line with over production as well aslesser export levels expected this year.
With Kenyan teas finding large buyers at present, it is believed that Indian tea exports may not cross the 180 million kg mark this year. Moreover, a lot depends on the demand of teas from the Russian market.
This, however, is dependent on the the state of the economy.
Copyright © 1998 Indian Express Newspapers (Bombay) Ltd.
