Bangladesh tea prices dip at weekly auction on poor grade leaf

June 4 (Reuters) - Tea prices in Bangladesh plunged at a weekly auction on Tuesday amid a larger supply of low-grade leaf while the volumes offered were the highest for the season so far, brokers said.

Bangladeshi tea fetched an average of 174.76 taka ($2.3) per kg at the auction against 183.26 taka at the previous sales on May 27, an official at National Brokers Limited said.

Major buyers were back at the market on arrival of fresh leaf as the new season started on May 14, the official said.

Around 1.33 million kg was offered at the sole auction centre in Chittagong, and 29 percent remained unsold. At the previous auction, nearly 910,000 kg was offered, of which 30 percent went unsold.

The latest offering was the largest of the season so far, while supplies of poor-grade tea pulled down the average prices, although demand was strong for quality leaf, the official said.

Bangladeshi buyers have been importing tea in bulk from neighbouring India, contributing to a glut in the domestic market and reducing demand at auctions, industry sources said.

That prompted authorities to extend the last season through April from the typical close at end-March.

In April, however, the Bangladeshi tax authority trebled regulatory duties to 15 percent on imports of tea to discourage overseas buying as ample local supplies have driven down prices. ID:nL3N0MZ185

Bangladesh's tea production in 2013 rose 1.6 percent from a year earlier to a record 63.5 million kg due to favourable weather.

That still fell short of domestic consumption of about 65 million kg. Bangladesh has moved from being a net exporter to a net importer of tea as consumption has risen.

Following are the results of the latest auction. Figures are in Bangladesh taka per kg. BROKENS

Bold/Large Brokens 165-170

Medium Brokens 170-177

Small Brokens 178-188

Plain Brokens 145-155 FANNINGS

Best Fannings 190-200

Good Fannings 180-188

Medium Fannings 168-178

Plain Fannings 145-155 DUST

Pekoe Dust 170-200

Red Dust 175-270

Dust 180-266