Tea Shortage to Widen 10% as India, Kenya Droughts Hurt Crops

[Dover]

Tea Shortage to Widen 10% as India, Kenya Droughts Hurt Crops


Sept. 8 (Bloomberg) -- A global tea shortage may increase by 10 percent next year as droughts in Kenya, Sri Lanka and India, the top exporters, damage crops and propel prices to a record, the world’s biggest tea plantation company said.

The deficit may widen to 110 million kilograms (243 million pounds) by May to June next year, compared with 100 million kilograms this year, Aditya Khaitan, managing director, of McLeod Russel India Ltd., said in an interview. Record tea prices in Kenya and India may gain by another 15 percent in the next 12 months, he said.

Reduced supplies will increase costs for tea marketing companies including Tata Tea Ltd., owner of Tetley brands, and Unilever Plc, while boosting earnings at producers McLeod, Goodricke Group Ltd. and Jayshree Tea & Industries Ltd. African tea prices rose to a record at auctions on Aug. 29, while Indian prices have gained an average 25 percent this year.

“I don’t see any relief for tea consumers for the next one year,” said Harsh Gupta, an analyst at SMC Global Securities Ltd. “The global shortage isn’t likely to be overcome anytime soon as prices will firm up further.”

Stagnant prices for almost a decade since 1999 caused some tea estates to close and forced plantation companies to cut investment in replanting old bushes and adding new machines, McLeod Russel’s Khaitan said by phone from Kolkata yesterday.

“Tea is playing a catch-up with other agriculture commodities, which have shot up in the past couple of years,” he said. “The tea deficit is here to stay and the prices will continue to rise.”

cont'd

http://www.bloomberg.com/apps/news?pid=20601091&sid=a9By6A4PTOaw

[cliffordu]

1. This means the teabags are going to be shrinking, I suppose....

[Warpy]

2. I use loose tea

so I'm expecting the price to shoot up and the "settling" in the PG Tips box to be a little more dramatic.