MARKETS
Tea records negative variance
Sri Lanka tea averages to end May 2011 records a negative variance of
0.39 percent compared with the corresponding period of 2010 which was a
record year for averages and production. High Grown averages are
marginally higher with a variance of 0.08 percent where as Medium and
Low Grown has recorded negative variances of 0.91 percent and 0.29
percent respectively.
Sri Lanka tea |
CTC Low Grown averages in particular have recorded the highest slide
with a negative variance of 7.27 percent. In comparison, Low Grown CTC
averages in 2010 did exceptionally well with monthly averages in excess
of Rs 400, with the exception of November where the averages dropped to
Rs 395.72. Against the back drop of these attractive averages which
extended into the first quarter of 2011, what we are seeing today is a
sharp drop in prices for this category of tea. From the month of April
2011, CTC Low Grown averages have declined by approximately 11 percent
compared with the corresponding period of 2010.
Sri Lanka tea crop for May of 32.0 Mkgs, although marginally down
compared with corresponding month of 2010, (33.3Mkgs) is still a very
satisfactory crop considering that in March of this year the crop
harvested was 33.3 Mkgs which was the highest on record surpassing the
previous best of 32.4 Mkgs in 2008. The strong performance in the first
five months of May 2011 has helped maintain a slight advantage of 1.5
Mkgs (1.15 percent) over last year which, as already reported, was a
record year.
On the global front whilst there is a positive variance on production
in Asia (India and Sri Lanka) reports from Africa suggest, crop declines
in Kenya, Malawi and Tanzania due to colder and drier weather. June crop
from this region is also very likely to be down on last year.
There are reports that heavy rainfall in China leading to severe
flooding could lead to production declines. The flooding across Eastern,
Southern and South Western China has caused widespread damage to
Agricultural crops. It is reported that 171,000 hectares (422,550acres)
of crops have been destroyed with more than one million acres of farm
land in Eastern provinces inundated due to the floods.
Last week’s large volume of 1.7 Mkgs of Ex Estate teas as expected,
met with lower demand and consequently prices declined Rs 15 to Rs 20
and more. A few Select Best Western High Grown BOP/BOPFs sold well
following quality, while others tended lower. The Below Best and plainer
types too declined Rs 20 and more.
Nuwara Eliya’s continued with its downwards trend with many invoices
remaining unsold and prices for both BOP/BOPFs on average only selling
between Rs 250 to Rs 280 and Rs 250 to Rs 285 respectively. Uva’s were
irregularly lower by Rs 15 to Rs 20. Best Low Grown CTC PF1s maintained
and at times were a little dearer, whilst the balance were irregularly
lower with a fair weight remaining unsold. High and Medium PF1s too
declined Rs 10 to Rs 15 with a number of invoices also remaining unsold.
Another disappointing week for the Low Grown tea prices. The few
select best BOP1 and OP1s advanced fairly sharply, but all others met
with a lower market. The below best OP1s were difficult of sale with a
high percentages of withdrawals. A handful of Pekoe1s met with a dearer
market, all others declined Rs 10 to Rs 15.
The Russian buyers were fairly strong but all other markets were
rather subdued.
Western Teas
Select Best BOPs declined Rs 20 to Rs 25 and at times more, whilst
the below best sorts too eased by a similar margin. Plainer varieties
were Rs 10 to Rs 15 easier. Select Best BOPFs were lower by Rs 15 to Rs
20 and at times more while the Below Best sorts were lower by Rs 20
Plainer varieties were Rs 10 to Rs 15 lower. Medium BOPs eased Rs 10 to
Rs 30 whilst the BOPFs were Rs 20 to Rs 30 lower.
Nuwara Eliya
Teas BOPs were Rs 10 to Rs 15 easier, whilst the BOPFs too were lower
by Rs 10 to Rs 20.
Uva Teas
BOPs were easier by Rs 10 to Rs 15, while the BOPFs too were lower by
a similar margin. Uda Pussellawa BOPs were Rs 10 to Rs 15 lower while
the BOPFs too were Rs 10 to Rs 20 easier.
CTC Teas
Select Best Low Grown PF1s were irregularly firm to dearer at times
while the others eased by Rs 5 to Rs 10 and at times more. BP1s were
lower by Rs 5 to Rs 10. High and Medium PF1s were easier by Rs 10 to Rs
20, while the BP1s too eased by Rs 10 to Rs 15.
Low Growns
Fair demand. Select Best BOP1s/OP1s were firm while the Best and the
Below Best types were irregularly lower by Rs 10 to Rs 15 and declined
further as the sale progressed, poorer sorts declined Rs 10 to Rs 20.
Select Best OP/OPAs appreciated by Rs 15 to Rs 20 and more at times,
while the Best types were firm to dearer Rs 5 to Rs 10 on average. Below
Best and poorer sorts declined Rs 15 to Rs 20 with a large volume
remaining unsold. Shotty Pekoe/Pekoe1s were firm to dearer Rs 5 to Rs 10
while the Best and the Below Best types declined Rs 15 to Rs 20 on
average. Bold Pekoes declined further by Rs 20 to Rs 25 and more at
times. Select Best BOP/BOPSPs were firm, Best types were lower by Rs 5
to Rs 10, Below Best sorts declined Rs 10 to Rs 15, Poor types were
firm.
Select Best FBOPs maintained last levels, Best and Below Best types
shed Rs 5 to Rs 10, Below Best types too were lower by a similar margin.
Select Best FBOPF1s maintained last levels, Best types advanced a few
rupees above last, Below Best and poorer sorts shed Rs 5 to Rs 10.
Select Best and Best Typpy sorts declined on last levels, Below Best
types were often neglected due to lack of demand, Poor types were lower
by Rs 10 to Rs 20.
Off Grades
Select Best liquoring Fngs1s depreciated by Rs 5 to Rs 10, while the
Below Best and Poorer sorts eased by Rs 10 to Rs 15 and more at times.
Select Best and Best BMs sold at firm levels whilst the Below Best and
Poorer sorts were irregularly dearer by Rs 10. All Low Grown Fngs shed
Rs 15 on average.
All BPs appreciated by Rs 10. Select Best BOP1As along with the Best
were lower to last by Rs 5 to Rs 10 and more at times, Below Best and
Poorer sorts too shed by a similar margin.
Dust
Select Best Dust1s were firm. A few invoices in the Best and Below
Best category advanced Rs 5 to Rs 10 while the balance declined Rs 10 to
Rs 15. All secondary Dusts shed Rs 5 to Rs 10. Best Low Grown
Dust/Dust1s were firm while the balance eased Rs 15 to Rs 20.
Liquidity crunch: Market in the red
Both indices continued on the downward trend seen for most of this
month with the ASPI losing 157.47 points to close at 6892.56 and the MPI
losing 161.57 to close at 6439.30. ASPI contracted by 2.23 percent and
the MPI by 2.45 percent. The weekly turnover in value contracted by 38.4
percent to record a daily average turnover in value of Rs 1.77 billion
when compared with last week’s daily average turnover of Rs 2.88
billion.
The number of shares traded declined by 43.8 percent, averaging 121.9
million shares traded daily as against 217 million traded last week.
Banking and Finance sector returned to lead the turnover in value as
activity in finance counters was witnessed with the sector accounting
for 25.5 percent of turnover in value amounting to Rs 2.26 billion.
Second highest contributor to turnover was Land and Property sector
which accounted for 13.66 percent amounting to 1.21 billion. Third
highest on the turnover value list was Manufacturing sector with 12.96
percent or Rs 1.15 billion.
Volume of turnover for the week was dominated by Banking and Finance
sector 169.2 million shares being traded or 27.76 percent of volume of
turnover, followed by the Manufacturing sector which represented 22.32
percent of turnover volume as 136 million shares traded. Third highest
contributor to turnover volume was the Power and Energy sector, which
accounted for 14.56 percent or 88.7 million shares. Market
capitalization was at Rs 2,373.08 billion while the Market Price Earning
Ratio was 23.3 and Price to Book Value at 3.0 East West dominated
turnover list for the week recording a turnover of Rs 814.22 million,
representing 9.2 percent of the market turnover.
Blue Diamonds contributed 5.6 percent of the aggregate market
turnover recording Rs 499.28. Pan Asian Power accounted for 4.83 percent
or Rs 428.64 million. Shalimar was the major gainer in price witnessing
an increase of 42 percent in comparison with last week price of Rs
660.20.
The share closed at Rs 940.70. Swarnamahal Finance became another
major price gainer witnessing an increase of 42 percent against last
week price of Rs 40.00 to close the week at Rs 56.50. Morisons (Non
Voting), Chilaw Finance, Indo Malay recorded a gain of 38 percent, 29
percent and 29 percent respectively. Kalamazoo showed a significant
price decrease of 47 percent against last week price of Rs 5945.00, to
close at Rs 3145 this week. Singer Industries became another loser
witnessing a dip of 23 percent against the previous week price of Rs
354.10 to close at Rs 271.2.
Hunter witnessed a decline of 21 percent compared to last week’s
price of Rs 1192.40, closing the week at Rs 945. Foreigners remained net
sellers this week as foreign purchases recorded an average daily buying
of Rs 100.33 million, compared to last week’s average daily buying of Rs
294.62 million, witnessing a contraction of 65.94 percent week on week.
Average daily foreign sales increased by 55 percent from last week to
record Rs 161.79 daily average selling as against last week’s daily
average of Rs 104.1 million.
Pan Asian Power topped the volume list recording 80.09 million shares
changing hands representing 13.14 percent of the aggregate share volume.
Blue Diamonds (Non Voting) contributed 9.86 percent of aggregate share
volume with 60.1 million shares changing hands. Blue Diamonds (Voting),
East West and Amana were other popular shares for the week.
Point of view
As anticipated, retail dominance continued during the week’s trading
with very low institutional participation.
Selling pressure continued due to settlement dates and investors
cashing in on equity portfolios to meet liquidity requirements to invest
in the primary offers. This resulted in both indices recording further
declines from last week’s close.
Acuity
stockbrokers research
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