The decision of shipping companies to suspend all transactions through the Red Sea following the attack on commercial vessels by Houthi rebels has left Kochi’s tea trade dizzy.
Traders pointed out those alternate routes via Cape of Good Hope would be longer and expensive and it is evident that the cost will have to be borne by the exporters which would facilitate a surge in logistics cost, thereby reducing their margins.
However, an industry source in Kochi said tea trade might see a spurt in the buying in the short term due to the delays that are expected due to the longer travel time. “We expect that the demand to be higher in the short term due to delayed deliveries which would be beneficial for the trade”, the sources said.
Too early
Dipak Shah, Chairman of South India Tea Exporters Association, told businessline that the rising freight cost is going to be a major issue in the diversion of cargo which exporters have to absorb and may reflect on the purchasing value of tea. Since it is Christmas holidays in the US, Europe and other destinations, it is too early to comment on the impact emanating out of the emerging situation and a clear picture will emerge only after the New Year. Moreover, the transit time will also increase which may make African teas more attractive to overseas buyers, he said.
Meanwhile, the sold percentage of orthodox teas in sale 51 in Kochi auctions was only 71 out of the offered quantity of 1,69,048 kg. The market for select best and brokens was dearer while the remaining was irregular and lower. Exporters to CIS and West Asia were active.
At the same time, absence of auctions next week due to Christmas holidays next week has boosted the CTC dust market with good liquoring teas dearer by ₹2 to ₹3 and sometimes more with longer margins of ₹5 to ₹10 especially for popular markets of Kerala.
The average price realisation was up by ₹4 at ₹136 compared to ₹132 in the previous week. The sold percentage was 92 out of the offered quantity of 8 lakh kg.