Rising Export Demand Drives Up Orthodox Tea Prices In Kochi

1 OCT 2022

Rising export demand drove up orthodox leaf prices at Kochi Tea auctions, with the average price realised increasing by 6 per kg. According to traders, there have been strong inquiries from CIS nations, Europe, and Turkey, but rising costs practically every week are ruining the party, with exporters unable to meet their commitments in completing their orders.

According to trade data from Sri Lanka, the island nation's tea output is on the decline. August was the lowest tea production in 28 years, with 18 million kg produced compared to 23 million kg in August 2020.

Tea auctions held by the Tea Trade Association of Cochin (TTAC) are failing to find buyers due to low export demand to Russia and other Commonwealth of Independent States (CIS) nations in the midst of the Russia-Ukraine conflict. A protracted battle might have long-term consequences for tea farmers in south India. 

The efforts to auction tea in all categories — CTC or conventional (both leaf and dust) — have met with a lacklustre reaction, with over half of the tea on offer at the Kochi auctions on Wednesday finding virtually no buyers.

Despite the fact that the average price for the type had dropped to a recent low of 142 yen per kg, over 41% of orthodox tea remained unsold at the current TTAC auction in Kochi. This is the most common tea cultivar sent to Russia and the other CIS nations. In all categories, around 39% of the entire supply remained unsold.

The prior week's auction had also seen a decline in interest due to the uncertainty around shipping cargoes. The average price of tea in all categories fell to 133.13 per kg in the most recent auction, from 145.40 per kg in the previous sale. If there is no significant improvement in the global environment in the following weeks, the situation is unlikely to alter.

"The drop in the value of the rouble versus the dollar as a result of sanctions imposed on Russia for the invasion of Ukraine has increased the risk for exporters, including payment delays." Any increase in exports will be dependent on global events, and growers would, of course, be on the receiving end in the long term," said R. Sanjith, an economist.