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DateLine Tuesday, 22 January 2008

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Bartleets Weekly Tea Market Report:

Kenyan crisis may boost Lankan tea demand

The quantity of tea arriving at the Colombo Auction upto January 16 rose to 6.302mkg as compared to 6.124 mkg in the previous sale which too was a higher amount compared to the previous sales.

Ex-estate crops also increased from 0.878mkg to 0.905mkg as compared with last week.

Market Segments: On the Ex Estate market segment across the board BOP teas were Rs.5 to 10 dearer whilst better liquoring BOP fanning’s were firm. Below Best and poor sorts were Rs.5 to 10 lower. CIS and Japan were active.
On the Tippy market segment there was lower demand experienced in the sale due to buyers from Iran, Dubai, Turkey and Saudi Arabia maintaining very selective buying patterns.

On the Leafy-grade market there was a sharpdecline in this week’s low grown. Mostly affected grades were Best OP and OPA grades.

Except for the select best OP1’s rest of the categories too depreciated. With two large sales ahead this was expected. It will not be surprised if the market comes down further with the availability of large volumes in the weeks to come.

Production: With reference to data from the Sri Lanka Tea Board, tea production had dropped by 8.5 percent in November 2007 to 27mkg.

The 11 months period between January and November reported a cumulative drop of 5.8 per cent on the production which is at 272.6mkg as compared with the previous year. Low-grown teas were down to 15mkg in November from 20.7mkg a year earlier.

Meanwhile high-grown teas were up to 6.7Mkg from 5.1mkg and the mid-grown teas too reported 5.4mkg from 3.9mkg compared to previous November. Despite the dip, prices remained at higher levels.

Company news: Richard Pieris and Company who is planning a reshuffle on the loss making group of companies are hoping to develop the plantation sector companies that are doing well. Namely Namunukula, Maskeliya, and Kegalle which contribute around seven per cent of the total tea and rubber output in the country.

However, they are facing problems relating to increases in labour costs and a drop in labour productivity that is threatening sustainability of the sector in the medium to long term.

The management has also taken a decision from this year onwards to give priority to expedite re-plantation.

International: The Kenyan crop up to October last year was down by 24.1 per cent to 308.4mkg according to world crop statistics.

Meanwhile, the violence which erupted in Kenya due to the disputed national elections has disrupted production and significantly affected tea volumes.

This may lead to international buyers and blenders turning to Colombo to meet some of their requirements.

According to a local exporter, some impact will be visible on the smaller leafy types but it all depends on the seriousness of the Kenyan crisis which in turn can boost tea prices here.

Yerba, Mate: Argentina is popular for two of the most demanded infusions in the local market, which is Tea and yerba mate (mate tea). Misiones and the northeast of Corrientes are the production areas shared by both varieties.

Meanwhile, the yerba mate has been in the subtropical regions of Argentina, Brazil and Paraguay which is only distributed within its above natural distribution area. Most common consumption pattern is placing the yerba mate in a specific container, pour hot water on it and sucking the infusion by means of a special tube.

Logistics: According to a leading freight forwarder heavy winter storms have hit Iran and reported to have clogged-up the highways. Due to the fact container trucking has come to a standstill from Bandar Abbas to inland destinations.

The storm which began in last December worsened in the beginning of January and is expected to carry on till another three weeks.

Alternative transport mediums such as rail, has been in use to transport the backlogged containers. Stocks: With reference to the weekly surveillance of the 19 plantation stocks, 16 were high in value whilst three reported static. Talawakelle Plantation reported a 23 percent growth week on week.

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