MUMBAI: Tea prices in India eased at this week’s auction as supplies improved in the peak plucking season, although good demand and a likely drop in the country’s production restricted the downside, dealers said.

The price of CTC (crush-tear-curl) tea dropped 1.18 per cent to 142.68 rupees per kg, while the dust variety edged up 0.2 per cent to 149.43 rupees per kg.

“Usually during this period we see higher supplies. That is the main reason behind softening in prices,” said an official at Calcutta Tea Traders’ Association.

“Demand is strong from local and overseas buyers. Anticipating lower production this year, they are buying actively,” the official said.

Tea plucking in India, the world’s second-biggest producer, usually rises between July and October.

India’s tea production in the first seven months of the year fell 4.2 per cent year-on-year to 470.7 million kg as dry weather in Assam hampered plucking earlier in the year.

The country’s 2012 tea output is expected to ease 1.5 per cent to 973 million kg from a record 988.3 million kg in 2011 as drought affected the crop in the first six months of the year.

The average price of top grade Kenyan tea firmed to $4.15 per kg at auction this week from $4.13 per kg last week, traders said on Tuesday.

India exports CTC tea mainly to Egypt, Pakistan and the UK, and the premium orthodox variety to Iraq, Iran and Russia.