Tea prices are expected to rise by 10 per cent on low supply and higher global demand in 2009, Centre for Monitoring Indian Economy (CMIE) said in its monthly review.
The average montly auction tea price rose by 36.6 per cent to Rs 106.8 per cent in May 2009 compared to a 15.1 per cent rise in the year-ago quarter, CMIE said.
According to the Indian Tea Association, world tea production declined by 17.5 per cent during the first quarter of 2009 and it is expected to remin low for the entire year.
Low world tea production means more demand for Indian tea.
CMIE expect India to capitalise on this opportunity and increase its tea exports in 2009.
As expected, a dry spell hit the April crop in India, which declined by 21.8 per cent to 62,590 tonnes. Tea production in North India declined by 28.6 per cent to 39,684 tonnes with Assam's output down by 18.2 per cent to 30,852 tonnes.
South India's tea production also declined for the fourth consecutive month by 6.4 per cent to 22,906 tonnes.
"We believe that India's tea production will recover from May 2009. Consequently we expect tea production in 2009 to rise by a meagre 0.6 per cent to 986.9 million kilograms," CMIE report said.
