The cold wave in large parts of the country could prove to be a bonanza for the tea industry, price-wise. The harsher the winter, the higher is the consumption of tea. If an estimated 70 per cent of the country's population drinks at least an extra cup every day to ward off the chill, it will mean consumption of close to 850 million additional cups every day. In reality, the figure could be higher.
The demand for tea has shot up at a time when there is no sign of improvement in supply. With a predictable result: rising prices. This week, the auction price of CTC tea strengthened following quality. So far in the current year, the auction price of CTC tea, accounting for the bulk of the country's production, has been up Rs 10 a kg on an average over the last year. In the case of orthodox, the increase has been higher, about Rs 25/kg, and in case of Darjeeling, close to Rs 100.
The scenario worldwide is more or less the same. The severe cold wave in the northern hemisphere has boosted global tea demand. This, along with the recent dry spell affecting crop in Kenya, the single largest supplier of CTC tea in the world market, has set the market on fire. The price at Mombassa tea auction has skyrocketed – up by 40 cents a kg in the past few weeks.
Frost in N. India
The persistence of severe cold in tea-growing areas in North India will hit the crop. Tea growers are particularly apprehensive of the frost that has already caused damage in some areas.
Also, the icy wind will have a drying effect on the December and November crop or the end of season crop. All of which means there may be low availability of tea in March and April when, as inquiries reveal, at least two auctions a centre in North India might have to be dropped.
Till November, the production of North Indian tea was down 15.7 million kg vis-à-vis the same period last year. Industry sources indicate that the December production, too, will be lower by 20 per cent compared with 36.5 million kg in December 2009. In South India, the November production was down 3.3 million kg and likely to be the same in December also. Overall, it is estimated that the current fiscal may end with a shortfall of 25 mkg to 30 mkg of tea.
The industry perhaps couldn't have asked for anything more.
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