Darjeeling tea trade turns cold on strong rupee

Even as prices of the first flush Darjeeling tea have surged by 15-25 per cent in the international market, primarily on account of less availability of this variety, tea producers might fail to convert the price increase into higher margins owing to currency volatility. Tea producers from Darjeeling say the price increase has happened majorly in the mid-range bracket, where the tea is sold between Rs 1,300 and Rs 1,500 a kilogram (kg), while it’s Rs 3,000-3,300 a kg for the upper bracket. However, prices have remained stagnant at Rs 500-700 a kg for lower grades. S S Bagaria, former chairman of the Darjeeling Tea Association, says on average, the international prices have shot up to $22 a kg (Rs 1,410, at current exchange rate) from last season’s $20 (Rs 1281).  Commodity Trading Tips

“Production was severely affected on account of erratic weather. Thus, while the net available tea in the international market was low, the demand increased by five per cent, which led to a price rise,” he said. Demand, particularly, increased from Japan, the US, and the UK, while it fell by 20 per cent for top grades from German blenders. “Although the prices are up, a strong rupee might bring down the actual earnings once the US dollar or the British pound or the euro is converted into the Indian rupee,” said C P Krishnan, director, Geofin Comtrade. Nifty Trading Tips