Commodity prices and outlook
Although, land is the
limiting factor for increasing production, no tea shortage is
likely in the foreseeable future. The global demand growth at 2% pa
will be easily met by rising production from Kenya, Sri Lanka,
Malawi, Indonesia and other countries. These countries are foreign
exchange starved and tea is a vital part of the economy. Their tea
industry is entirely export oriented. These countries lead a price
cut if there is a surplus. On the other hand, rising domestic
demand in India and China will restrict their exportable surplus.
Pakistan is likely to emerge as one of the largest
importers.
Weather changes from
month to month. There have been occasions when shortfall of ten
months has been more than met in the last two months. Bad weather
in some of the major producing countries can lead to a significant
price rise. However, that will be temporary. Unlike coffee, (where
Brazil is the dominant producer) tea production and exports are
more wide spread, reducing the possibility of wide swings in the
prices as have been experienced in the coffee trade.
|
International Prices - London
auction
|
| Price in US cents per Kgs |
1994-95
|
1995-96
|
1996-97
|
1997-98
|
|
April
|
185
|
170
|
171
|
231
|
|
May
|
184
|
160
|
176
|
232
|
|
Jun
|
196
|
145
|
171
|
210
|
|
July
|
182
|
145
|
160
|
206
|
|
Aug
|
184
|
151
|
171
|
245
|
|
Sep
|
200
|
163
|
187
|
226
|
|
Oct
|
190
|
177
|
183
|
236
|
|
Nov
|
180
|
174
|
189
|
246
|
|
Dec
|
172
|
180
|
199
|
248
|
|
Jan
|
163
|
175
|
206
|
327
|
|
Feb
|
169
|
176
|
217
|
302
|
|
March
|
170
|
169
|
226
|
228
|
|
Avg
|
181
|
165
|
188
|
245
|
Domestic market is price taker
India produced 805mn
Kgs of tea and consumed 615mn kg in 1999. For domestic consumption,
imports are not allowed. Domestic demand is relatively insensitive
to price. The domestic price is determined by the price realized
from the surplus sold in the international market. Although prices
vary for different varieties, they move in tandem. Impact of carry
over stock is not significant. Therefore, demand and supply
situation in the international market plays a critical role in
determining the local prices. The tea consumption market in India
has been slowing down due to shift in the consumption pattern of
youth towards carbonated drinks this has led to oversupply
situation in the country as a result the tea price are
falling.
|
Production
|
Prices
|
|
|
(Average)
|
|
(mn kgs)
|
(Rs/kg)
|
|
Dec-98
|
56.2
|
68.14
|
|
Jan-99
|
21
|
67.57
|
|
Feb-99
|
15.1
|
64.28
|
|
Mar-99
|
25.1
|
59.09
|
|
Apr-99
|
48.7
|
59.22
|
|
May-99
|
60.9
|
73.64
|
|
Jun-99
|
95.0
|
75.86
|
|
Jul-99
|
99.6
|
76.02
|
|
Aug-99
|
97.2
|
74.60
|
|
Sep-99
|
103.2
|
79.04
|
|
Oct-99
|
99.1
|
81.62
|
|
Nov-99
|
84.3
|
79.83
|
|
Dec-99
|
56.2
|
70.89
|
| Jan-00 |
20.95 |
67.12 |
| Feb-00 |
16.76 |
61.59 |
| Mar-00 |
34.03 |
51.73 |
| Apr-00 |
71.16 |
47.82 |
| May-00 |
58.16 |
59.99 |
| Jun-00 |
88.41 |
61.23 |
| Jul-00 |
106.07 |
67.57 |
| Aug-00 |
108.17 |
65.86 |
Production
comparison
| Production
figures in mn Kgs |
1999
|
2000
|
% change |
|
January
|
21.11
|
20.95
|
-0.75 |
|
February
|
15.1
|
16.7
|
+10.86 |
|
March
|
25.1
|
34.1
|
+35.73 |
|
April
|
48.7
|
71.2
|
+46.17
|
|
May
|
60.9
|
58.1
|
-4.48
|
|
June
|
95
|
88.4
|
-6.91
|
|
July
|
99.6
|
106.1
|
+6.54
|
|
August
|
97.2
|
108.2
|
+11.21
|
|
September
|
103.2
|
102.1
|
-1.06
|
|
October
|
99.1
|
98.4
|
-0.71
|
