Tea market - comment

SALE: Sale No. 30 comprising 6.1 m/kgs was concluded this week.

Ex Estate offerings comprised 0.84 m/kgs. This week there was a fair weight of improved Western BOPs/BOPFs on offer.

Consequently, in keeping with the improvement in quality Select Best BOPs together with improved Below Best gained Rs. 10-15 per kg. At the lower end too there was better demand resulting in prices advancing on last.

Corresponding BOPFs too commenced at Rs. 10-15 per kg dearer. However, the mentum could not be maintained resulting in BOPFs declining Rs. 10-15 per kg and more towards the close.

Yet, a few Select Best invoices on offer were able to command a premium over the preceding sale. Nuwara Eliya BOPs met with improved demand and were mostly dearer to last whilst BOPFs were barely steady.

Offerings from the Uva/Udapussellawa region too showed some improvement and the Select Best teas gained with buyers following quality closely. CIS continued to be the main stay for the BOPFs whilst UK, Japan and the Continent too were active.

A total of 3.1 m/kgs came up for sale this week in the Low grown Leafy/Tippy catalogues. In the Tippy catalogues there was improved demand for neat leaf FBOP/FIs which sold at fully firm to dearer rates.

Cleaner secondaries too were a dearer feature. In the Leafy catalogues OP/OPAs gained Rs. 10-15 per kg whilst Select Best BOPIs and OPIs too were fully firm to dearer.

Pekoes, however which had a good run in the recent past, were subject to a price correction resulting in prices declining Rs. 20-30 per kg and more towards the close. CIS, Turkey, Iran, Saudi Arabia, Dubai continued to lend useful support whilst other traditional out markets too were fairly active.

Sri Lanka Tea Exports - June 2007

January-June Volume lower by 9.1%

FOB value up by 21.6%

Exports for the month of June 2007 of 26.1 m/kgs reflects a decline of 4.3 m/kgs or 14.2% when compared to the corresponding figure of 30.4 m/kgs. The main contributory factor for this decline could be attributed to the decrease in the bulk tea category.

However, it is noteworthy that in value terms a significant gain is evident for this category. Tea in packets too have shown an appreciable gain in terms of value for the month. The average unit FOB value for ‘07 of Rs. 351.68 per kg shows a gain of Rs. 81.86 per kg or 30.33% compared to Rs. 269.82 per kg of 2006.

This increase in the FOB unit value also shows a significant gain in US$ terms too i.e. 2006 unit FOB value was equivalent to approx. US$ 2.58 per kg whilst 2007 average FOB value is equivalent to US$ 3.14 per kg.

January-June 2007 exports of 143.9 m/kgs reflects a deficit of 14.4 m/kgs or 9.1% when compared to 158.4 m/kgs for the same period of last year. The FOB unit value for 2007 have shown a gain of Rs. 59.40 per kg or 21.6% as against the corresponding figure.

The average unit FOB value for Jan-June 2007 of Rs. 334.03 per kg is equivalent to approx. US$ 2.98 per kg whilst the corresponding unit value of Rs. 274.63 per kg is equivalent to approx. US$ 2.63 per kg.

Hence, it is noteworthy that even in US$ term an increase in price is evident. For the period January-June ‘07 tea in bulk for the current year have declined by 11.8 m/kgs whilst tea in packets have declined 6.2 m/kgs as against the corresponding figure.

Courtesy: Forbes & Walker Tea Brokers (Pvt) Ltd