NEW DELHI, India
The payment crisis created by sanctions against Iran has led to a precipitous decline in prices to levels below CTC for India’s orthodox tea.
Orthodox teas generally command a price three or more times greater than CTC (cut, tear, curl) teas processed for the domestic market. A drop in exports to Russia and stockpiles destined for Iran awaiting payment are undercutting the orthodox market.
Auction prices were INRs 124 ($2.40) per kilogram, the lowest since 2005.
U.S. led sanctions are preventing timely payments and causing confusion. The Central Bank of Iran was attempting to establish accounts for currency trades in Indian rupees but exporters are not getting paid and the unsold tea is accumulating. India produces 40 million metric tons of orthodox tea, but consumes only a small fraction. Iran generally purchases 12 million metric tons.
"The months between August and October are peak production period for tea," Chairman of Indian Tea Association C.S. Bedi told NewsWire18 CommodityWire. "At the same time, lack of clarity over Iran payment issue is keeping buyers away, putting pressure on the price," he said.
Source: NewsWire18 CommodityWire