The Israel-Hamas conflict in West Asia is seen impacting the orthodox tea shipments as the Kochi auctions witnessed a decline in prices and offtake in this week’s sale. The trade fears that the impact could worsen if the war situation prolongs.
The sales percentage of orthodox leaves in sale 41 was only 70 per cent out of the offered quantity of 2,00,159 kg against 81 per cent in the previous week’s sale. According to traders, the overseas shipments to destinations through the Suez Canal are likely to be hit on account of the war and they anticipate further disruptions in tea procurement from the auctions if the situation worsens.
Last week, exporters in Kochi were jubilant after realising an increase of ₹4-5 per kg for orthodox leaves to Iraq, Iran, Tunisia and the firming trend in prices had rekindled their hopes on getting more orders. But this week, there was only selective buying with a subdued demand from West Asian countries. However, exporters to CIS countries lent fair support.
The auctioneers Forbes, Ewart & Figgis said the market for Nilgiri whole leaf and brokens was lower and witnessed withdrawals. Medium whole leaves and brokens followed a similar trend.
“We have to wait and see how things are going to escalate in the next couple of weeks. Though shipments are moving, the situation is very fluid and anything can happen. Our exports to Israel is very limited but to other destinations via Suez is huge,” a tea exporter in Kochi said.
Dipak Shah, President of South India Tea Exporters Association, told businessline “it is too early to say anything on the current situation and its fallout as the conflict has started only a couple of days back. But any escalation in oil prices following the war will have repercussions on freight costs which the tea industry could not afford to meet especially when tea prices are dropping. So far, things are not looking bright”.
Monojit Dasgupta, advisor, Federation of All India Tea Trade Association, said orthodox tea market in North India was generally down basically because of the payment issues with Iran and this downward price trend is still continuing.