LONDON TEA MARKET

Press, Volume XCI, Issue 27603, 9 March 1955, Page 15

LONDON TEA MARKET

RESISTANCE TO HIGH PRICE

The recent fall in tea prices on the London market reflects the determined efforts of dealers and blenders to keep prices down, and there is no doubt that the influence behind this changed attitude is the stiffening consumer resistance to retail prices, says the "Financial Times." The improvement in Ceylon’s tea crop is a real one, but it has been known for some time that the crop in that country would exceed by about 23,000,0001 b that of last season. Similarly, the outcome of the Indian crop is also known. At the end of 1954, the crop in North India—the major producing area in the world—was 508,000,0001 b, compared with 484,900,0001 b in 1953. But the result of the Indian .crop has also been fairly clear to estimate for several months, and now that crop is almost all plucked. On any analysis of production and consumption there is no great weight of tea to counter-balance the rise in world demand. What is more, until there is some news of the new North Indian crop later in the year there can be no real change in the statistical outlook. The resistance now being shown by buyers at the auctions mav well mean that distributors intend to avoid a further retail rise iLAt.is at all possible. On the other Hand, the long-term success of any such buying policies must depend on .a change in the trend in world consumption as a whole, and of this there is as yet no definite indication. Unless this takes place, it is hard to see any largescale drop in auction* prices before the summer at least. But although the present relationship between world supply and demand gives no warrant for a heavy fall in prices, the point may well have been reached when tea prices will rise no further. There is no doubt that blenders are now seriously airaid of the impact on their trade of a further rise in retail prices. Throughout the long period of increasing auction prices, blenders have, in spite of the criticisms levelled against them, been reluctant to raise their prices. Increases in retail prices have normally been outdated by further rises in auction prices, and this policy of restraint has only been possible because of favourable stock positions.