Low output growth across India may drive up prices in 2014
Sustained demand, dwindling inventory levels and low production growth may lead to higher prices for Indian tea in 2014, says Crisil Research. Over the last five years, local and international demand for Indian tea has steadily outpaced production growth, which has been hovering around 1.6% annually. Inventory levels dropped from 5.3 months in 2009 to 2.6 months in 2013. In 2014, this trend is set to continue, with output growing by 1%, compared to a 2% increase in demand. The export market offers a mixed picture, according to Crisil Research. CTC exports are estimated to decline sharply, by as much as 14%, due to lower demand from Egypt and the Middle East. Exports of orthodox tea, on the other hand, should rise by 5% to 95 million kilograms thanks to sustained demand and flat global production.