The escalating tension in West Asia following the Iran-Israel standoff appears to have impacted the Kochi Tea auction market, which is witnessing sluggish off-take from the overseas buyers.
An exporter told businessline that there had been a slowdown in overseas buying in the last fortnight, which hit the beverage prices badly. Many buyers are now non-committal in placing orders because of the worsening situation in West Asia, resulting in declining orders in the auction platform.
Iran and Iraq are the major buyers of South Indian tea and both these markets have been affected by the ongoing crisis. Many shippers are hesitant to place orders fearing delayed payments and rising freight costs. There could be further fall in prices if the crisis deepens, the exporter said. But he felt that the situation could be a blessing in disguise as it may open up markets in Russia and CIS countries albeit not as big buyers as Iran-Iraq.
Contributing factor
Dipak Shah, chairman of the South India Tea Exporters Association, said not only friction in the West Asian countries but the prevailing high prices of tea, which have gone up by around 60 per cent in the last couple of months, is also a contributing factor for dwindling tea shipments. None of the exporters could generate any business orders at these current prices.
Moreover, there are excessive crop arrivals in the auction platform due to rains and this has affected the quality of the tea. All these factors have led to declining export orders, he added.
Meanwhile, the quantity offered in sale 42 for orthodox leaves in Kochi auctions was 3,79,653 kg and the market witnessed only 74 per cent sales. The prices for whole leaf and brokens were lower by longer margins of ₹5-10 a kg and sometimes more and it also witnessed some withdrawals. The average price realisation was also down by ₹16 at ₹185 , the auctioneers Forbes, Ewart & Figgis said.
CTC dust prices were also lower by ₹3-4 a kg especially for high-priced teas and witnessed lot of withdrawals. The average price realisation was down by ₹4 at ₹163.