Kolkata: The tea market particularly for quality tea will remain buoyant in the next three months because of tight supply position both in international and domestic markets, according to C K Dhanuka, Chairman of Dhunseri Tea & Industries Ltd, and also the past Chairman of Indian Tea Association and Tea Association of India.
Currently, the international inventories of tea are at record low and there is no cushion left with the traders and blenders to bring down the level further. With this tight inventory position, the market has become very sensitive and starts reacting sharply with any short term imbalance (either shortage or excess), observes Dhanuka in a statement.
The lower crops in North India, Kenya and several other producing countries in first quarter of 2008 pushed up the global prices.
The demand for second flush this year, he feels, is going to be extremely strong and price may touch a record high. This will happen because of the additional pressure in demand likely to be from those traders who had maintained lower inventories and also from exporters because of lower crop reported from Kenya.
Global demand
Dhanuka estimates that the global demand for tea will rise by 100 million kg annually for next five years but the supply is unlikely to match the projected increase in demand.
The imposition of minimum quality standard as ISO 3720, MRL (maximum residue limit which relates to the residue of chemicals used in tea plants) etc. as a means of improving of quality of tea will reduce the availability of tea in the world market.
Replantation, rejuvenation of old bushes and producing more of orthodox variety will also affect the production of tea in India.
“It will not be wise to expect 500 million kg or more of additional tea in the global market in the next five years,” Dhanuka adds.
Currently, the international inventories of tea are at record low and there is no cushion left with the traders and blenders to bring down the level further. With this tight inventory position, the market has become very sensitive and starts reacting sharply with any short term imbalance (either shortage or excess), observes Dhanuka in a statement.
The lower crops in North India, Kenya and several other producing countries in first quarter of 2008 pushed up the global prices.
The demand for second flush this year, he feels, is going to be extremely strong and price may touch a record high. This will happen because of the additional pressure in demand likely to be from those traders who had maintained lower inventories and also from exporters because of lower crop reported from Kenya.
Global demand
Dhanuka estimates that the global demand for tea will rise by 100 million kg annually for next five years but the supply is unlikely to match the projected increase in demand.
The imposition of minimum quality standard as ISO 3720, MRL (maximum residue limit which relates to the residue of chemicals used in tea plants) etc. as a means of improving of quality of tea will reduce the availability of tea in the world market.
Replantation, rejuvenation of old bushes and producing more of orthodox variety will also affect the production of tea in India.
“It will not be wise to expect 500 million kg or more of additional tea in the global market in the next five years,” Dhanuka adds.
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