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<ul><li>Erratic weather, coupled with a pandemic, has curbed tea production in Assam, which makes for more than half of India’s total tea output.</li><li>The price of tea had hit a record high in 2020 and the average price has risen further this year.</li><li>Branded players like Tata Consumer Products and <keyword id="44863" type="COMPANY" weightage="20" keywordseo="HUL">HUL</keyword> are giving profit margin to stay competitive and to grab market share from smaller players.</li><li>There are over a million people, mostly women, working in tea gardens losing productive days and wages due to the pandemic and inclement weather.</li><li>India is the second largest tea producer after China, and ranks fourth among tea exporting nations after Kenya, Sri Lanka.</li></ul>The price of tea was already at a record high before the weather in Assam got a bit kooky. And that could make tea even more expensive in the days to come. Companies like Tata Consumer Products and Hindustan Unilever (HUL) may pass on the rising cost or chai (Indian tea) lovers may have to curb enthusiasm for their favourite beverage. The average price of tea sold at the auctions in Guwahati (Assam) in 2021 has crossed ₹211 per kilogram and in Coonoor (Tamil Nadu), the average price for the year was more than ₹125 in mid-May. It was the COVID-19 lockdown last year that scuttled tea production and, this year, it’s the worst drought in decades. <table style="border-width: initial; border-style: none; table-layout: fixed; width: 468pt;"></colgroup><tbody><tr><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">Auction market </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">Avg price for 2021 </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">Avg price for 2020 </td></tr><tr><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">Guwahati </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">₹211.75 </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">₹164.42 </td></tr><tr><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">Coonoor </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">₹125.87 </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">₹114.3 </td></tr></tbody></table>Source: <a href="https://www.teaauction.gov.in/pages/News.aspx#">Government data</a> Manoj Jallan, former chairman of the North Eastern Tea Association (NETA), described the current drought as the worst in 30 years. "Temperature drop from 34 to 19 degrees Centigrade coupled with hardly any sunshine for the last one week, preceded by temperatures above 34 degree Centigrade is playing havoc with the crop," Mrigendra Jalan, advisor to yet another producers’ lobby, Bharatiya Cha Parishad, told IANS, a news agency. All in all, the cup of tea is likely to get more expensive in the near future. This is because Assam and West Bengal produce more than 80% of all the tea in India (the world’s second largest producer after China). <div type="image" title="state tea output" msid="82792455" hostid="261" caption="&amp;lt;p&amp;gt;Graphics by Business Insider India.&amp;lt;/p&amp;gt;"></div> Business is not entirely bad for the companies. Tata Consumer Products, which sells Tata Tea among other brands, saw the beverage segment (including coffee) grow 59.6% by revenue, and 23% by volume, in Jan-March 2021. Tea consumption in India was already on the rise before work-from-home, forced by the pandemic, allowed people to have more cuppas each day. <div type="image" title="tea demand" msid="82792499" hostid="261" caption="&amp;lt;p&amp;gt;This a picture of the rising tea demand in India before the pandemic struck. The pace of growth has been better in the last year. &amp;lt;/p&amp;gt;"></div> However, overall operating profit margin for the company shrank nearly 10% and the primary contributor was the rising cost of buying tea from the estates. Hiking retail prices, cutting employee cost and marketing spends was not enough to protect the bottom line from shrinking. But that’s just the story of the three months ending March 2021. The business has been booming for Tata Consumer Products, whose revenue has grown 1.6 times and net profit is up nearly two and a half times over the last three financial years. <div type="image" title="tcpl financials" msid="82792549" hostid="261" caption="&amp;lt;p&amp;gt;The compounded annual growth rate for Tata Consumer Products in the last three financial years is 10.9% for revenue, and 19.7% for profit, according to ICICI Securities report dated May 10. &amp;lt;/p&amp;gt;"></div> The tea sellers at <keyword id="6355725" type="COMPANY" weightage="20" keywordseo="tata-group">Tata Group</keyword> and HUL are using this period to remain competitive and capture as much of the market as possible. There are many Indians who still prefer cheaper unbranded suppliers. The unorganised market is estimated at ₹9,000 crore a year, by ICICI Securities, compared to the ₹16,500 crore organised segment where Tata Tea has steadily maintained a market share of 20%. So, the current <keyword id="22195" type="COMPANY" weightage="20" keywordseo="Inflation">inflation</keyword> in <keyword id="46725" type="PERSON" weightage="20" keywordseo="Tea-Prices">tea prices</keyword> could be a bigger jolt for smaller players as well as the million-plus people working in the tea gardens. Several hundred workers in many tea gardens under at least 15 districts have been infected by the <keyword id="1754604" type="COMPANY" weightage="20" keywordseo="coronavirus">Coronavirus</keyword>, IANS reported. The Indian summer is the peak harvest and loss of production may also mean loss of wages along with a rise in cost of healthcare. SEE ALSO: <a target="_blank" class="c-link c-message_attachment__title_link" href="https://www.businessinsider.in/business/startups/news/skyroot-aerospace-raises-11-million-in-funding-with-plans-to-have-vikram-1-on-the-launch-pad-by-mid-2022/articleshow/82788901.cms">Skyroot Aerospace raises $11 million in funding with plans to have Vikram-1 on the launch pad by mid-2022</a> <a target="_blank" class="c-link c-message_attachment__title_link" href="https://www.businessinsider.in/cryptocurrency/news/cryptocurrency-polygon-founded-by-3-indians-has-touched-13-billion-in-market-cap/articleshow/82770196.cms">Cryptocurrency Polygon, founded by 3 Indians, has touched $13 billion in market cap</a> <a target="_blank" class="c-link c-message_attachment__title_link" href="https://www.businessinsider.in/business/corporates/news/adani-green-energy-to-acquire-sb-energy-india/articleshow/82759578.cms">Adani Green Energy to acquire SB Energy India, boosting its renewable energy capacity by 4.9GW</a>

A cup of regular tea has never been this expensive in India, thanks to kooky weather

McLeod Russell brewed tea stocks on fire on Tuesday as bulk prices of the commodity firmed up further in Kolkata's auction markets. 
 
Weekly average prices for CTC leaf tea on a per kg basis stood at 163.57 rupees/kg on June 27, the latest data available, compared with 161.95 rupees on June 20th and 145.07 rupees on May 23rd. This upward trajectory is expected to continue. 
 
Meanwhile, Jayshree Tea jumped 18 percent to 79 rupees. Rossell Tea gained 10 percent to 100 rupees. Goodricke Tea rose 10% to 147.70 rupees.Warren Tea added 9 percent at 140 rupees and Mc Leod Russell up was 7 percent at 236.40 rupees on the Bombay Stock Exchange. 
 
(Image: Indiatimes)

Investors watch out!
Tea is hot and brewing in the markets today

<div class="KonaFilter image-container display-table"><div><div class="image on-image">REUTERS/Baz RatnerSoldiers, believed to be Russian, ride on military armoured personnel carriers on a road near the Crimean port city of Sevastopol March 10, 2014.</div></div></div>
Good morning. Here's what you need to know.
Fuel cell stocks going crazy in pre-market trading. Fuel cell stocks continue their <a href="http://www.businessinsider.com/fuel-cell-stocks-ripping-2014-3">surge</a> this morning in pre-market trading following FuelCell Energy's announcement of quarterly earnings results. The company's loss of $0.06 per share was slightly worse than expected, but it reported revenues of $44.4 million, topping analysts' $43.4 million consensus estimate. FCEL is trading up over 18% on the news.
Small business optimism tumbles. NFIB's Small Business Optimism Index fell to 91.4 in February from 94.1 in January. The consensus forecast of market economists predicted a smaller moderation to 93.8. "Small business optimism continues its winter hibernation with the latest Index dropping 2.7 points to 91.4, a reading that historically has been associated with recessions and periods of sub-par growth," said Bill Dunkelberg, chief economist at NFIB, <a href="http://www.nfib.com/surveys/small-business-economic-trends/">in a press release</a>. "The one highlight in the January survey, a surge in hiring plans, was crushed in February by the continued onslaught of a wintry recovery now in its 5th year." 
Markets are quiet. S&amp;P 500 and U.S. Treasury futures are pointing to an unchanged open. Gold is up a bit, trading around $1348 an ounce. The German DAX and the Italian FTSE MIB are up, but most other European indices are in the red. Overnight, the Japanese Nikkei 225 rose 0.7% and Chinese indices eked out gains.
Nothing from the BoJ. The Bank of Japan elected to refrain from introducing any new policy measures at the conclusion of its latest meeting on monetary policy, as expected, and the U.S. dollar is unchanged against the Japanese yen this morning. "The assessments of the economy in the statement were marginally changed, upgrading those on the fixed investments and the industrial productions slightly while downgrading the one on the exports," says Osamu Takashima, a strategist at Citi. "All in all, the positive tone in the assessments is unchanged, which justifies the Bank's conservative stance toward additional measures. Our economists in Tokyo see a 80% possibility of the next action at the June or July meetings while also seeing a 20% risk at the April meeting, after the consumption tax hike."
Mobile price wars. In an <a href="http://www.businessinsider.com/owner-of-sprint-wants-to-start-a-price-war-with-verizon-and-att-2014-3">interview with Charlie Rose</a>, SoftBank tycoon Masayoshi Son said he wanted to buy T-Mobile's U.S. unit and engage in a price war with wireless carriers AT&amp;T and Verizon. SoftBank already owns a controlling stake in Sprint. "If I can have the real fight, I go in a more massive price war," said Son. "I want to be number one. So if we are number three, and if we have enough chance, I want to be number one. So I would go to price competition, very much aggressively."
German surpluses. Germany recorded a 16.2 billion euro current account surplus in January, down from December's 21.1 billion euro surplus but above consensus estimates of a 15.3 billion euro surplus. German exports rose 2.2% and imports rose 4.1% - both above expectations - narrowing Germany's trade surplus to 17.2 billion euros from 18.3 billion euros.
Final read on Italian GDP. Revised data released today revealed that Italian GDP rose 0.1% on a work-day adjusted basis in the fourth quarter of 2013, in line with previous official and market estimates. Year-over-year GDP growth, however, was revised down to -0.9% from -0.8%.
Muted U.K. industrial production. U.K. industrial production rose 0.1% from the previous month in January, marking a slowdown from December's 0.5% pace of expansion and missing estimates for a 0.2% gain. The year-over-year rate of industrial output growth was 2.9%, also slightly below consensus estimates. "The floods are thought to have distorted the data, but the take away is that the U.K. is still enjoying relatively robust economic activity," says Marc Chandler, global head of currency strategy at Brown Brothers Harriman. "Several BoE officials testify before the parliament, but their general stance is known, and barring a surprise, is unlikely to change the market's direction."
Second-tier U.S. economic data. There are no major releases on the U.S. economic data calendar today. However, the U.S. Bureau of Labor Statistics will release the results of the latest Job Openings and Labor Turnover Survey - a favorite metric of new Fed chair Janet Yellen's - at 10 AM ET. January wholesale inventories data are also out at 10 AM.
Mid-month supply calendar begins. The U.S. Treasury will auction $30 billion of 3-year notes today at 1 PM ET. "With some short covering around/after the stronger-than-expected U.S. jobs number, positioning should be cleaner, and given supply-related concession, the UST market may get biased lower in this relatively data-light week," say Nomura interest rate strategists. "Given all but one of the 3-year auctions since last July have come through the 1 PM mark, we expect this auction to go well, especially given lingering geopolitical uncertainties." 
***
Below is a Q&amp;A with Russ Certo, head of rates at Brean Capital.
***
BUSINESS INSIDER: What is one big story in the bond market that no one seems to be talking about?
RUSS CERTO: In a relative sense, I suspect the market is critically gauging the prospective quantity, scope, and timing of tapering of the Federal Reserve's asset purchases. However, I think there could be ultimately significantly more meaning and value in fully and accurately anticipating the more vexing challenges and relevance of fine-tuning its forward guidance. Aspects related to the scope of the taper are likely to be technical. Forward guidance evolution will likely have a more qualitative relevance to markets. A focus on the latter and the evolution of the ultimate Fed message will have impacts not only on global equity, foreign exchange, commodity and interest rate and credit valuations, but also on volatility in these markets. BI: How are investors approaching the current yield spread between U.S. Treasuries and German Bunds, which just hit a fresh 8-year high?
RC: There is good reason to believe that there are significant capital inflows into European sovereign bonds from the Pacific Rim recently. In fact, not only have the underlying bonds rallied, but the euro is making a 2-year high at the moment as diversified reserves globally are making their way back to euroland for a variety of direct foreign investment purposes. Some monies may also be diversifying as the Federal Reserve has embarked upon a tapering of asset purchases, a tacit indication of confidence in the underlying economy and/or removal of extreme crisis-era monetary policy measures. Both interest rates and currency values also reflect a disconnect of market expectations, and many investors globally were likely underweighted both complexes. BI: The February nonfarm payrolls report revealed signs of acceleration in wage growth. Meanwhile, food prices are surging. Is the TIPS market respecting the risks of increased inflation?
RC: I acknowledge your observation, which I have called "a tale of two markets." The TIPS market has been stubborn in reflecting some of the volatility which we have seen in other commodity and capital markets. For a quick tally, coffee has surged by 78% this year, cattle prices are making all-time highs, lean hogs are up 25% in the year to date, and this has extended to sugar, corn, soybeans, cotton, and even orange juice - something we pointed out in the softs a few commentaries back. I'm sure more than a few have been looking at their natural gas bills, as the futures are up 15% in the year to date, or even gas prices at the pump (over $4 a gallon in the United States). Precious metals have also percolated and are seeing significant real demand globally versus more financial market position liquidation. Trading any of these is not for the faint of heart, and there does seem to be a disconnect - or decoupling - between the nominal performance of TIPS versus general risk assets and those represented by the inflation complex. BI: To the extent that weather distortions are still weighing on yields, when do you think the market will start to move past that?
RC: I think the market HAS, to some extent, shrugged off bad weather effects, as interest rates increased by near 20 basis points last week, partially as an interpretation of economic data, ex-weather effects. Historically, weather effects which have adversely impacted demand side activity and consumption have proven to ultimately spur pent-up demand. I can't wait until spring myself - or next year's or quarter's comparison to a bevy of economic statistics adversely impacted by wintry weather. As a glaring example, Janet Yellen even gave lip service to these "transitional" impacts, and the most recent Federal Reserve Beige Book tally of economic activity cited weather 119 separate times. BI: Which developments in global financial markets would you flag as most concerning for the bond market right now?
RC: All markets are going to have to accurately, as always, interpret the incrementalism and "tea leaves" of central bank policy changes. Some have introduced the concept of "owning the tails" - or tail risk of markets - in case of a material surprise relative to expectations in either dovish or hawkish expressions from the central bank community, or real demand shocks, or meaningful acceleration in economic fundamentals. There is some empirical analysis which would suggest moderate gains in domestic equity markets again this year to follow last year's outsized gains. I suppose that if the real economy weans itself off of enormous amounts of fiscal and monetary stimulus and returns to real economic allocation of resources that the economy and markets can handle the passing of the policy baton. Allowing businesspersons to make real decisions without being encumbered with the uncertainty of policy distortions can be a powerful metric to deploy all the cash sitting on the sidelines. Growth for the right reasons. However, markets will have to balance record amounts of margin credit, historically tight credit spreads, and elevated valuations of most risk assets globally. Transitioning from artificial imbalances to real activity is the very thin line that policymakers and markets will have to walk.

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A cup of regular tea has never been this expensive in India, thanks to kooky weather

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