Holiday season sees drop in tea sales

(Bartleet Produce marketing Weekly Tea Surveillance Report upto April 2)

The quantity of tea arriving at the Colombo Auction this week decreased to 6.784 mkg from 6.873 mkg traded in the previous sale. Meanwhile the Ex-estate crops too showed a decrease from 1.238mkg to 1.167mkg.

MARKET SEGMENTS: In the Ex-estate segment panic buying eased off and the overall market showed a considerable drop which can be expected to last till the end of June according to industry sources. Meanwhile, considering the upcoming holiday season most of the exporters are refraining from stocking teas which has contributed to the prices drop.

Plainer teas are looking at a significant downturn whilst Better Brighter teas will be sort after by Japan, UK and the Continent. In the Tippy market segment firm demand was witnessed whilst buyers from Dubai were active whereas Iran and CIS were very selective in their buying patterns.

In the Leafy Grade segment teas bought by CIS countries were lower by Rs. 10 to 15 and was difficult to sell. Only few buyers were operating for wiry type grades and therefore the market was irregularly lower. Only grade that showed an improvement from last week was Pekoes. Particularly the bold types had received quite a lot of inquires from Turkey.

EXPORT DATA: Some 15.4 percent increase had been witnessed in January 2008 on the overall exports year-on-year with a 41 percent growth reporting in the Agricultural exports according to Central Bank statistics.

Meanwhile tea exports had made a major contribution of 38 per cent to the growth in total exports in January 2008. Increased export tea prices had facilitated the tremendous growth year-on-year. Tea fetched a monthly average export price of US$ 3.83 per kg in January 2008 whilst tea shipments gained 46 percent to 90.8 million dollars.

RECORD BREAKERS: Great Western Estate which is managed by Talawakelle Tea Estates Limited established an "All time record" price of Rs. 680 for a Western High Grown BOP at the tea auctions held on March 18.

To begin with, Somerset Estate recorded a price of Rs. 670 per kg for a BOP line overtaking its own record of Rs. 610 per kg for a Western High Grown BOP established in February 2007. This was further improved during the sale with a BOP invoice of Great Western Estate realizing a price of Rs. 680 per kg, thereby establishing the highest record price achieved for a BOP invoice at the auctions to date.

TRADE DEAL: Sri Lanka is in the look out to increase trade with China through a regional trade deal which is the Asia Pacific Trade Agreement (APTA), is a larger opening into the massive Chinese market.

According to an official of the Department of International Trade of China the country's imports will reach early one trillion dollars worth from the rest of the world. With APTA trade talks, the coverage of Chinese concessions to Sri Lanka will definitely benefit the coir fiber, rubber and the tea industry.

Meanwhile year 2007 tea exports had shown a growth of 65 percent. As the trend in the Chinese tea drinking has changed in to more black tea consumption, since 2003 which has grown from 172 tones to 880 metric tones up to November 2007.

Which the islands tea has been enjoying a preferential tariff rate of 7.5 per cent under the APTA as against the general tariff of 15 per cent. Currently, there are 35 tea exporters to China as compared to 26 in 2006, which clearly shows the benefit reaped through APTA.

COMPANY NEWS: Tata Tea which is claimed to be the largest player in packet tea business in India, followed by Hindustan Unilever has announced of a increase prices of its packet tea in the next few weeks to come according to the Executive Director of the company.

The impact is anticipated due to the geo-political situation in Kenya and the flood in Assam which had crippled the tea production, hardening the price of the commodity and the prices are forecasted to go up by Rs. 7-10 a kg in future weeks to come.

PLANTATION STOCKS: With reference to the weekly surveillance of the 19 plantation stocks, 12 were high in value whilst five were lower and two reported static. Talawakelle and Bogawantalawa Plantations witnessed a gain of 15 and 6 percent respectively, week on week.