Tea prices shoot up at auctions after rains hit Assam, West Bengal

Estates in central Assam recorded between 4.50-6.50 inches of rainfall as against a normal rainfall of 1-1.50 inches in July.

Tea prices in auctions have increased after rains and floods in plantation regions of West Bengal and Assam, encouraging companies to be optimist about their gains.

Prices of CTC (crush, tear, curl) tea in Kolkata auctions are up by 4.18 per cent at Rs. 177.12 a kilo. Assam CTC is the largest beneficiary, as its prices have increased by by 13.84 per cent at Rs. 215.99 per kg. A similar trend was reflected in a Guwahati auction centre, where prices of Assam CTC tea was up by 4.45 per cent at Rs. 166.12 per kg.

Tea production was down in June and data for July is yet to be available. As against an output of 78.55 million kg (mkg) in June last year, Assam produced 75.25 mkg of tea. 

While 1.097 mkg of Assam CTC tea was listed for auctions in Kolkata in the 30th sale in end of June 2018, this year, it fell to 0.98 mkg. 

“Ideally, if there is a scarcity of tea, prices should improve,” said Atul Asthana, managing director and CEO at Goodricke Group.

The Tea Association of India (TAI) expects production in July in West Bengal to have dipped by around 10-15 per cent in the first fortnight of the last month. West Bengal and Assam produce around 12.50 per cent and 13.5 per cent of their total crop in July, which is estimated to be around 48.50 mkg for each of these states.

“From what it seems till now, on the average, prices of CTC have been stagnant while Dust tea prices fell. Prices of Orthodox teas on the other hand, have gone up well. On the average, prices have declined very marginally”, Vivek Goenka, president of Warren Tea said.

Prices of Assam orthodox teas improved by 11.40 per cent at Rs. 237.38 a kilo on a year-on-year basis in the last auctions. 

Goenka, who is also the chairman of the Indian Tea Association (ITA), believes that as production data for July becomes available, there will be more clarity on tea availability and prices.

“Tea arrival in auctions may be less and prices are expected to increase. But to what extent or what actually happens, that we need to wait and watch”, Sujit Patra, secretary at ITA said.

TAI said that estates like Socketing , Halmira and Socklating in middle Assam had recorded between 4.50-6.50 inches of rainfall as against a normal rainfall of 1-1.50 inches during the first fortnight of July 2019 while Sankar Tea Estate in upper Assam has recorded as high as 15 inches of rainfall during the period. 

In estates like Doomni in Assam, rainfall was recorded at 25.82 inches as against 16.11 inches in 2018. In Lakhimpur area in the north-eastern state, Cinnatolia Tea Estate has experienced 33.07 inches rainfall against 11.69 inches last year which has severely affected production.