A mixed bag for tea prices

With the weather playing truant, north and south Indian tea is moving in divergent directions.

The output in south India in May was up by about 2.5 million kg while that in north India was down to seven million kg.

“North India crop showed an increase of 6.9 million kg till April. In May, we probably lost about the same or a little more. June does not look better either,” said Aditya Khaitan, chairman, Indian Tea Association.

That probably explains why tea prices in north India are much higher compared to south India. Prices in north India were Rs 15-20 a kg higher compared to the same period last year in the private sales.

“There is a glut of good quality tea,” said an industry representative.

Prices in south India, in contrast, were selling at Rs 7-8 a kg lower than last year. Till April, the crop in south was higher by 10 million kg.

However, things took a different turn in May. “There was too much rain, the temperature was not conducive for growing conditions. I doubt north India production will be at the same level as last year,” said an industry representative.

If north India was showing a firm trend in prices, then it was an aberration, given that prices had eased across the globe. Prices at Mombasa auction eased with top grades dropping from $3.82 a kg to $3.42 a kg.

Sri Lanka tea fell sharply by the end of May by about 20 Sri Lankan rupees a kg and is now recovering little.

The primary reason being that the crop output across the globe was higher by about 100 million kg.

After last year’s deficit crop, Kenya and Sri Lanka reported a higher output of 75 million kg during January-March while south India recorded an increase of 12 million kg, followed by north India at 6.9 million kg.

The three countries account for 80 per cent of the black tea production.