Sri Lankan tea gains lost momentum

Sri Lankan tea continued to enjoy a strong demand in the high grown market with the tea bag sector forcing prices of smaller grades further up. The low grown market is expected to remain strong despite a slightly increased offering in the future owing to good demand from the Middle East prior to the Ramadan season, weekly auction reports reveal.

According to the weekly auction report of sale number 25 from June 30 to July 1, 2009, In the Low Grown Leafy Category high priced Pekoes were firm while the others appreciated by Rs. 10-15 USC. Low Grown Small Leaf Category FBOP/FFI gained by 5-10 USC all round with improved teas in the ‘below best’ and ‘bottom’ categories gaining further. In the Ex-estate best Western BOP were firm to selectively dearer. While the High Grown quality shows an improvement the low grown quality is maintaining its position, Zeastatea Company said in a statement. Although the economic recession harshly affected the Sri Lankan tea market, the rapid return of tea buyers to the market in mid December last year has seen the local market very active in the first half of this year.

Extracts depicting the gross sales averages in the public auction of the sale prior to the last sale- ‘Sale Number 24’ of the years 2009, 2008 and 2007 indicate that High Grown has increased to 300.70 from 269.39 in 2008 and 211.80 in 2007 according to the comparative weekly reports of the respective years.

The Medium Grown tea has also appreciated in the auction recording the highest rate of 310.91 for Sale No. 24 in this year’s weekly report, after having recorded 280.16 in 2008 and 217.32 in 2007.

Low grown stood at 383.81 in 2008 and 282.70 in 2007 in the Sale 24 weekly report and has now risen up to 425.03 in this year.

The total of the weekly gross sale average in this year’s Sale 14 report stood at 377.62 compared to 339.21 in 2008 and 252.44 in 2007.

Tea production in India, the world’s largest grower, is expected to decline by at least 5 percent this year after dry weather damaged crops in the nation’s main growing region.

This is likely to boost global prices as India’s exports decline. Tea output in Kenya, the world’s biggest exporter of black tea, fell 7 percent in the first three months of the year because of dry, hot weather, the Nairobi-based Tea Board of Kenya said on May 5. The above factors also led the Sri Lanka tea market to recover fast as there was a sudden decline in supply in the global tea market as a result of both dry weather conditions in many tea producing countries a situation also adversely impacted by lower fertilizer application.