TEA MARKET

Uva season to see price improvement

Bartleet Produce Marketing Tea Surveillance Report upto June 17:

The quantity of tea arriving at the Colombo Auction this week increased to 8.076mkg from 6.886mkg traded in the previous week’s sale. Meanwhile the Ex-estate crops showed a decrease from 1.194mkg to 1.187mkg.

Market segments: In the Ex-estate segment, the market witnessed an overall lower demand as compared to last week due to the unusual buying patterns which have slowed the activity levels as the market moved towards correction.

The teas at the auction have been quite brighter compared to last week and the buyers from Japan, UK and the EU were seen actively buying whilst the CIS too were showing some interest.

Meanwhile the overall world crop intake has not shown an increase but the shortfall from Kenya has been somewhat covered by Sri Lanka and India. The unusual buying is anticipated to fade out over the coming week and the market is expected to correct itself further.

The Uva season too is anticipated in mid-July and the prices too will show some improvement in the months to come. In the Tippy market segment there were good demand where buyers from Iran were very active whilst CIS and Dubai were moderate in their buying pattern.

Meanwhile Saudi Arabia and Turkey were very selective in their buying patterns. This week’s Leafy grade segment improved further with all grades gaining from last week. Particularly Grades such as OP1, BOP1, and Pekoe1’s appreciated significantly. Inquiries from CIS countries helped below best OP and OPA grades to gain from last levels.

Export Markets: The fourth largest importer of tea in the world, the USA gave a much needed boost to Ceylon Tea at the mega tea promotional events in Las Vegas last week organized by Sri Lanka Tea Board. The event highlighted more than 400 tea related companies from across the USA and 39 other nations. Meanwhile tea imports to USA have shown a significant growth during the last six-year period.

The USA’s tea imports have moved up from 96,668mt in 2001 up to 113,651mt by 2007, registering a growth rate of almost 18 per cent during the six year period.

The enhanced demand for green tea, due to its health benefits, ready-to-drink tea products and specialty tea products have been the driving force behind this impressive growth in the USA tea market. According to an Indian newspaper, Sri Lanka together with Kenya is giving India “a run for its money in tea export market.”

A couple of years ago, China overtook India as the largest tea producer but currently it is Sri Lanka and Kenya which is in the limelight. According to sources, a steady rise in tea consumption within India is leading to a loss in the export market share which is filled by Sri Lanka and Kenya.

Meanwhile, tea exports from India have come down from 200Mkgs in 1998 to 157mkgs in 2007.

Come clean: Ceylon tea has been considered as the “Cleanest Tea” in the world because it contains the least MRL level. The unique quality and character has given an added advantage over the other producing countries. As the health consciousness of the consumer has increased, consumers demand is for food safety certified teas.

Main emphasis was given on implementation of good manufacturing, hygienic and standard sanitary operation in tea factories. As the future is for quality certificated teas, the Tea Board started early in implementing Ceylon tea quality management systems in 1998.

While the quality standard of live tea leaf is improved by the “Randalu Project”, tea factories are upgraded to produce high quality teas that are free of food hazards.

Tea Statistics: According to the Central Bank annual report for 2007, the price of Sri Lankan tea has soared above the average in the international market. This is due to intensive attempts taken to upgrade the quality of tea and to enhance and add value so much so that even the affect on the decrease of tea production in 2007 has been neutralized. Tea represented 1.2 per cent in the gross national product (GNP) in 2007.

The income from exports has gone up due to steady increase in the prices of tea.

Meanwhile, the wages of estate labourers have increased by 38 per cent from Rs. 189 to Rs. 260, by the 2nd month in 2007. The year recorded an increase of 31.7 per cent and 40 per cent in the price of tea exports and the general price of tea respectively in the Colombo auctions.

Plantation stocks: With reference to the weekly surveillance of the 19 plantation stocks, 14 were lower in value whilst two reported a gain and three reported static. Talawakelle and Hapugastenna plantations reported a gain of one per cent each, week on week.

Weekly average price movements

Western high growns Select best western BOP’s appreciated Rs. 5-10 per kg, others lost by similar margin. Below best types were irregular. Poorer sorts sold firm whilst a few improved types appreciated by Rs. 5 per kg. Best western BOPF’s appreciated Rs. 5-10 per kg. Select below best sorts appreciated Rs. 5-10 per kg., others sold firm. Plainer types followed a similar trend.

Nuwara Eliyas Nuwara Eliya BOP’s irregularly easier. BOPF’s lost Rs. 5-10 per kg.

CTC BP1’s were difficult of sale, PF1’s appreciated Rs. 15-20 per kg. Poorer types were difficult of sale.

Western medium growns Best BOP’s dearer by Rs. 20 per kg, others met with improved demand and dearer by Rs. 15-20 per kg. BOPF’s easier substantially.

Uva/Udapussellawas Uva/Udapussellawa BOP’s irregularly dearer. BOPF’s appreciated Rs. 05-15 per kg.

Off Grades: Low grown FGS/FGS1’s were lower by Rs. 3-5 per kg. Selected best BM types maintained last levels, below best and others were irregularly lower.

Dust: Select best primaries sold at last levels. Others in the best and the below best categories declined Rs. 5-10 per kg. Poor sorts sold at last levels. Clean secondaries sold at last levels. Below best varieties gained Rs. 3-6 per kg, others maintained. Best low grown firm, balance Rs. 5-10 per kg. gained towards the end. All CTC’s lower by Rs. 10-20 per kg.