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The Tea Association of Sri Lanka said that there will be a drastic reduction in Low Grown quantities at the auctions from mid June due to the floods and landslides in the Ratnapura, Galle and Matara Districts.

The Chief Executive Officer of the Association, Niraj de Silva said it was likely that there would be a 60 to 80 percent drop in weekly Low Grown auction quantities in the second half of June and possibly early July, judging by unconfirmed reports from affected areas.

The industry has been affected due to damage to machinery in factories which are under water and destruction of large quantities of made tea in those factories. Inability to pluck tea, disruption to power and transport difficulties are among the major problems the growers and factory owners are undergoing in these districts.

Meanwhile, the John Keells Tea Report said the total quantity of 8.53Mkg on offer at this week's Auction, has been recorded as the second largest ever. In the Ex-Estate sale too the offer quantity was one of the highest at 1.65 Mkg.

With product quality continuing to be uninteresting, coupled with much more selective bidding by several leading buyers, the prices of liquoring teas, which hitherto were selling quite well, declined very sharply, sometimes by more than Rs.30.

Consequently, not a single BOP/BOPF touched the Rs.200 level, and only 25 invoices were selling above Rs.150. At the lower end of the market however, after a hesitant start, the buyers operating in the domestic market bid actively, and price levels sometimes improved by Rs.2 to Rs.4.

The significant devastation to teas, tea lands and some of the Tea Factories caused by the worst floods in over half a century, failed to create a sense of urgency in the minds of the buyers at the Low Grown sale. In the absence of confirmed details when the sale commenced, buyers no doubt preferred to proceed cautiously.

As quantities for future sales are likely to decline rapidly, there could well be panic buying from the next auction.

The Low Grown average for last week's Auction improved and went above Rs.160, and such an average was last witnessed on January 21, just prior to the Iraqi war. The average of Rs.161.53 also compares quite well with the corresponding sale of last year, when the average was Rs. 162.05.

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