Tea centres hit by low exports, local demand

Weak export demand and the recent exit of corporate buyers such as Hindustan Lever (HLL) from the trade has resulted in a sluggish trend at the Coimbatore and Coonoor tea auction centres - a major market for CTC teas.

Trade sources attributed the sluggish trend to the Ramzan period - a time when Pakistan usually is not actively engaged in tea trade.

"Also after Onam, the market tends to witness a downward trend and once the festive season is over it gears up again," S Sriram, chief executive officer, Contemporary Tea Auctioneers, told Business Standard.

As a result, tea prices continued to decline for the third consecutive week by quoting Rs 1 to Rs 3 a kg lower than the previous auction.

At the Tea Traders Association of Coimbatore (TTAC), on September 29, the total offering amounted to 5.06 lakh kg against 4.72 lakh kg in the previous auction.

Though the major offtake of CTC dust grades came from domestic buyers, prices were lower by Rs 1 to Rs 2 on selective export enquiries.

The best CTC varieties (leaf) was traded at Rs 53-56 a kg and the best CTC dusts were in the range of Rs 60-67 a kg (Rs 5-7 lower than the previous auction).

At the Coonoor auction centre, 9.6 lakh kg of tea was auctioned on September 29, which saw average enquiries from exporters and domestic buyers. The best CTC varieties traded in the range of Rs 65-70 a kg, Rs 5 lower over the previous auction.

Although there is no significant change on the volumes offered, there has been a noticeable slump in rates for the past three weeks at these auction centres.

Rising production costs, higher taxation structure and lower / marginal profits obtained have led to many of the stakeholders thinking of the plantation sector as a 'sunset' industry.