Low grown tea prices to increase

Lumbini Edirisinghe

The prices for low grown tea is likely to be increased due to the short supply of tea in the global market and the depreciation of the rupee against the US dollar. This would result in high export revenue for suppliers.

"The main buyers of low grown tea are from the Middle East countries including Libya and Tunisia," Vice President, Asia Siyaka Commodities (Pvt) Ltd Dinal Fernanado said. Russian buyers also play a major role in the export market. One of our main buyers Iran seems to be inactive in this period because of their new year. But after the festive period we hope there will be a better demand, he said.

"Varieties like PEKOE, PEKOE 1, SBOP and FFI are in demand in the global market than other varieties. A drought in India's major tea growing region has led to a dramatic fall in production during the first quarter of the year.

Tea growers in the North-Eastern state of Assam say they produced 12,000-15,000 tonnes less tea in the first quarter than in the same period last year because of insufficient rain.

Production has also fallen in some other tea growing countries.

The Kenyan Tea Board has predicted a five percent fall in 2009 production due to dry weather. Last week's tea auctions in Colombo saw the prices being sustained with average low-grown tea prices near to Rs.50 per kilo for small leaves. Larger leaf varieties also showed signs of moving up," Fernando said.

In contrast high grown tea prices were not attractive as low-grown tea prices in the export market. Last year total tea production was 30 million kilos but this year we can not predict that much of productivity, Fernando added.

We anticipate total tea production and market would stabilize in July and expect production will come down in May.