New tea arrivals fetch better prices

New season tea has started making way into the market and the opening prices appear to be stronger than last year's.

Industry sources said the focus was on quality tea and prices were higher by Rs 10-15 per kg. The quality tea is set to get exhausted by December. Hence, the demand for lower-end tea is lesser than the quality tea.

Estimates of private forward contracts indicate that prices for the upper-end quality tea are higher by Rs 15 per kg and lower-end by Rs 10 per kg.

Though the crop for March are not yet available, they are expected to be much lower at 25-30 million kg compared with 30-40 million kg in the same period last year. This was largely due to the unseasonal cold in the north, said industry sources.

The industry is expecting the season to advance by two weeks but it is actually deferred. Normally, new season tea comes in mid-March. "But the season is deferred by two weeks contrary to the expectations," said sources.

Assam tea is hovering between Rs 120 per kg and Rs 150 per kg, higher by Rs 10-15 per kg, while Dooars is at Rs 95-110 per kg, no appreciation as of now. South India which has a declining crop is at Rs 75-85 per kg, similar to that of last year.However, sources warned that the scenario can change completely if the shortfall resulted in more than anticipation. "Markets have started reacting to the shortfall," said sources.

Last year on an average prices appreciated by Rs 8-10 per kg. The drought in Kenya played a key role in pushing up prices. Moreover, the internal demand was strong with a growing consumption.

The industry hopes to maintain the growth rate in consumption and the outlook is that there could be a shortfall by the end of the year. "If the consumption rate is maintained at this level and exports increase, with no bumper crop, we could have a shortfall in supply," said sources.