John Keells Weekly Tea Report:
Buyers quiet with approaching holidays
Towards the end of last week's auction for High Grown teas, the
buyers went unusually quiet, and not only did prices tumble but also,
the absence of bids made it difficult for the brokers to dispose of the
This week too a similar pattern emerged, but on a less dramatic
scale. In the days of yore such wide price disparities were uncommon, as
buyers spread their buying, and competed strongly throughout the sale,
to protect market share.
The weaker tone in recent sales means that averages have fallen
despite declining crops following the dry spell, and margins for the
producers have reduced.
It can be argued that prices have fallen from high levels and this
can be considered a market correction for teas at the lower end of the
In fact, all elevation averages for the first quarter reflect record
levels that are much higher than the first quarter of any previous year.
Despite the decline, current prices are significantly higher than the
price levels of the corresponding sale of last year.
Worthy of note is that the cost of production for the producer is now
Apart from a market correction, other reasons can be adduced for the
fall in prices. Improved inventory levels and higher costs for the
Freight rates which dropped and reached attractive levels last year,
have increased sharply in recent months, to be above the rates which
existed before the fall. Packing material costs have increased by around
The Rupee has been quite strong in recent weeks. Finally, retail
prices have not increased to match the high prices that existed.
Against the dark skies, there were some shining stars. The few
Western High Grown seasonal teas on offer at the Ex Estate sale fetched
tall prices with yet another all time record price secured, this time
for a FBOP grade from Diyagama West Estate at Rs 710. The garden is
owned by Agrapatane Plantations Ltd.
The sale was handled by brokers John Keells PLC.
Following the record breaking effort at last weeks sale Uda Radella
BOP continued its strong showing with yet another tall price of Rs 720
for a BOP Grade which was the Top price at today's sale.
The quantity of 2.7 mkgs of Low Growns that were on offer this week
is the lowest on record since July 28, 2009 where quantity on offer was
below the 3 mkg mark. The next two auctions i.e. April 21 and 27, 2010
the offer quantity declines further with the latter sale having only 2.5
The demand at this week Low Grown Auction continued quite attractive.
In the Leafy category, the bold Pekoes met with a dearer market,
however, some BOP1/OP1s were marginally lower. OPAs maintained last
In the Small Leaf category, prices for most grades declined several
rupees, this could be attributed to the selective demand from the
Iranian buyers due to their New Year festival where most trading houses
Some rain has been experienced in the Low Grown Planting Districts
which would help the production levels from decreasing further.
Most factories in the low country will close for the traditional New
Year on April 9 and resume operations around April 19.
Libya continued quite strong, whilst Dubai, Jordon, Iraq, Syria,
Saudi Arabia and other Middle Eastern countries lent useful support.
Select Best BOPs declined substantially following quality, other good
invoices shed Rs 15/- to Rs 20/- and more, Below Best sorts were Rs
10/-to Rs 15/- easier on average, poor varieties eased Rs 10/- and more.
Select Best BOPFs shed Rs 20/- to Rs 30/-, other good invoices were Rs
20/- easier, Below Best and plainer varieties declined Rs 10/- to Rs
15/- and more as the sale progressed. Select Best Medium BOPs were firm,
others declined Rs 10/- to Rs 15/- and more. Medium BOPFs declined Rs
10/- on average.
Nuwara Eliya Teas
Brighter BOPs were Rs 10/- to Rs 15/- easier, others were
substantially lower. BOPFs shed Rs 10/- to Rs 15/- on average.
Coloury BOPs were firm to marginally easier, others shed Rs 10/- to
Rs 15/- and more. Coloury BOPFs declined Rs 5/- to Rs 10/-, others were
Rs 10/- to Rs 15/- easier. Udapussellawa BOPs were firm to dearer,
whilst the BOPFs shed Rs 10/- on average.
Select Best Low Grown PF1s were firm, others declined Rs 20/- to Rs
30/-. BP1s were firm to Rs 5/- easier. High and Medium PF1s declined Rs
5/- to Rs 10/-. BP1s gained Rs 10/- to Rs 15/- on average.
Fair demand. Select Best OP1s maintained last levels, Best types were
irregularly lower by Rs 10/- to Rs 15/-, Below Best and poor sorts too
tended lower by Rs 5/- to Rs 10/-.
Select Best along with the Best BOP1s declined Rs 10/- to Rs 15/- and
more at times, however the Below Best types were dearer by Rs 5/- to Rs
10/-, poor types were irregularly dearer by Rs 3/- to Rs 5/-. Select
Best OPs were firm to Rs 5/- to Rs 10- dearer at times, the balance were
Select Best OPAs were firm to Rs 5/- to Rs 10/- dearer, however the
Balance were irregularly lower by Rs 5/- to Rs 10/- and more towards the
close. Select Best Pekoes shed Rs 10/- to Rs 15/- following quality,
however the bold Pekoe varieties advanced sharply by Rs 10/- to Rs 20/-
and more at times, Below Best and poor sorts were irregularly dearer by
Rs 5/- to Rs 10/-. Select Best Pekoes were substantially lower to last,
Best Pekoes eased Rs 5/- to Rs 10/-, however the Below Best and poor
sorts gained Rs 5/- to Rs 10/-.
Select Best and Best BOP SP. shed Rs 10/- to Rs 15/-, Below Best and
poorer sorts too eased by a similar margin. Select Best and Best BOPs
declined Rs 10/- to Rs 15/-, Below Best and poorer types were lower by
Rs 5/- to Rs 10/-.
Select Best and Best FBOPs were initially lower by Rs 10/- to Rs
15/-, but met with slightly better demand towards the latter part and
were lower by Rs 5/- to Rs 10/- on closing levels, Below Best types
declined Rs 10/-, poorer sorts were barely steady. Select Best and Best
FBOPF1s shed Rs 10/- to Rs 15/-, Below Best types and poorer sorts shed
Rs 5/- to Rs 10/-.
The Best Tippy varieties met with good demand and maintained last
levels, however the Below Best and poorer types were lower by Rs 5/- to
Select Best liquoring Fngs1s were lower by Rs 10/-, Below Best and
the Best depreciated by Rs 20/- and more at times, poorer sorts were
lower by Rs 10/- to Rs 15/-. All BPs sold at firm levels. Select Best
and Best BMs appreciated by Rs 5/-,whilst the Below Best and Best sold
at last levels, poorer sorts were dearer by Rs 10/-. All Low Grown Fngs
were irregularly dearer by Rs 5/-. Select Best and Best BOP1As were
lower to last by Rs 10/ - to Rs 15/-, whilst the Below Best and others
too were easier by Rs 15/- to Rs 20/-.
Improved demand. Select Best Dust1s were firm, whilst the others in
the Best and Below Best category advanced Rs 10/- to Rs 15/-. Poorer
sorts were irregularly dearer. Clean Secondaries gained Rs 10/- to Rs
15/-, whilst the Below Best types gained Rs 5/- to Rs 10/-, poorer sorts
eased Rs 5/- to Rs 10/-. Best Low Grown Dust/Dust1s advanced Rs 15/- to
Rs 20/-, whilst the Below Best types gained Rs 10/- to Rs 15/-, poorer
sorts maintained last levels.