South Indian tea is benefitting from the Sri Lankan crisis as export demand improved this week at Kochi auctions.

Traders said the market is witnessing good overseas demand, especially for orthodox leaves from Iran, Iraq, and Turkey, which were hitherto buying Sri Lankan tea. Shipment disruptions in the island nation have forced countries to scout for South Indian teas. The improved demand is evident from the average price realization in leaf sales which was up by  ₹10 per kg in sale 12 at  ₹142 compared with  ₹131 in the previous week.

Improving demand

Iran used to buy around 15-20 million kg of South Indian tea per year and of this 4-5 million was from Kochi. The subdued demand from Russia and Ukraine following the turmoil in both these countries can be compensated to a certain extent from the current Sri Lankan crisis, a leading tea exporter in Kochi said.

Auctioneers Forbes Ewart and Figgis said the market for Nilgiri whole leaf and brokens in orthodox leaf was firm to dearer following quality. The offered quantity was 2,31,810 kg and 77 per cent was sold. In CTC leaf, the market for good liquoring brokens was firm to dearer and with an offered quantity of 43,241 kg.

Deepak Shah, Chairman of South India Tea Exporters Association, told BusinssLine that there has been an improved export demand for South Indian teas, especially from countries such as Iraq, Tunisia that are mainly dependent on Sri Lanka. But this is not for high-priced teas but for low and medium-level teas. The emerging situation has come at a time when the market is facing subdued demand from Russia and Ukraine.

Asked whether the Sri Lankan crisis turned out to be an opportunity for Indian teas, Shah said, “It looks likely to sustain, but it all depends on weather pattern, crop shortage etc”. “Industry could have benefited by a higher price realization if there was a robust auction platform. After the inception of new Bharat Auction system, the system has seen disruption right from January till date. Further the buyers are clueless and so arebrokers as to what is happening. The buyers feels frustrated which ultimately suppress the bidding process resulting in heavy withdrawals to the disadvantage of sellers”, he said.

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