Tea purchases from Kochi auctions for exports have turned sluggish following the Israel-Iran standoff that has resulted in freight costs surging by around 50 per cent.

Traders focusing on exports said overseas buying was slow in the past week as importers paused procurement from the auctions. They pointed out that the freight cost rose to $3,500 from $2,500, resulting in an additional cost of around ₹50 per kg for tea, which many overseas buyers were not willing to pay. The emerging situation has slowed down shipments and those who have to fulfill the export commitment are only active in the market.

Dipak Shah, Chairman of South India Tea Exporters Association, told businessline that the rising freight cost due to Iran-Israel skirmish is obviously a challenging issue to conclude new business. The existing contract has to be fulfilled, but getting future contracts is likely to be delayed in the challenging conditions. The sector is also witnessing crop shortage due to inclement weather, leading to the prices to move up.

Bangla unrest impact

Asked if Indian tea will benefit in the export market due to the unrest in Bangladesh, Shah said “it is too early to say. Moreover, the exposure of Bangladesh in tea exports is very minimal and they are having a good domestic consumption.”

In sale 32 in Kochi, inclement weather in high ranges has hit tea arrivals and the quantity offered in orthodox leaf was only 1,87,983 kg with a sales percentage of 82. The average price realisation was down by ₹5 at ₹152 compared to ₹157 in the previous week.  

However, CTC dust market witnessed a strong demand with good liquoring teas becoming dearer by ₹2 to ₹3 and appreciated more as the sale progressed. The offered quantity was lower at 6,03,716 kg with a sales percentage of 96. Loose tea traders and upcountry buyers lent fair support.