John Keells Tea Market Report:

Altering weather patterns hit tea production

The impact of climate change seems to be drastically altering weather patterns, not only in Sri Lanka, but throughout the world. We have seen floods and severe droughts which has caused extensive damage to agricultural outputs in many countries including Sri Lanka.

The monsoons in Sri Lanka can no longer be predicted accurately, and the two quality seasons we enjoy have not brought about good seasonal quality, for a few years.

We have observed the rise in temperature giving way to much hotter weather conditions. The warmer weather, Sri Lanka has experienced this year at higher elevations could be a significant factor for the increase in tea production from these elevations, despite an over all drop in Sri Lanka’s Tea crop.

It has perhaps also constrained the level of quality, and the high quality of “Ceylon Tea” appears to be under threat.

It is believed that rising temperatures over the next couple of decades will have serious consequences on Sri Lanka’s dry zone agriculture. This thinking is shared by many countries, where climate change will have an impact on most agricultural crops including tea production with suitable lands being pushed into higher elevations.

In Kenya climate change is expected to drastically affect tea production over the next 40 years. At the recently concluded Tea convention in Mombasa, a presentation on the effects of climate change demonstrated that by the year 2050, nearly all of the Tea growing areas west of the “Rift Valley”, will be unsuitable for tea growing ! This represents nearly 60 percent of the Tea production in Kenya, including the popular Kericho district.

Following Climate change United Kingdom has started growing tea in parts of the country where the weather has turned warmer. In the long-term, this could pose a threat to the large volume of tea that is imported into the UK annually.

The first tea plantation in Tregothnan Estate in Cornwall, South West of England which is the country’s warmest region was established in 1999. It made its first harvest in 2005 and since then production has continued to improve.

A record harvest in excess of 10 tonnes is expected this year.

Could this be the beginning of a shift in the global tea cultivation map?

Last week’s average for Low Grown Tea reflects an improvement of Rs 8.40 over the previous week. The market however, was quoted as having declined around Rs 10 to Rs 15 for most grades.

Hence, the improved average does not reflect the market movement rather, the offer mix for this final sale of the month, along with the impact of unsold teas, which were predominantly, the lower priced varieties.

The slightly smaller weight of 0.9 mkgs of Ex Estate teas met with stronger demand at today’s sale. It was pleasing to note the additional interest shown for the Western High Grown BOP/BOPFs, mainly due to improved demand from Russia.

It was also pleasing to see little more activity for Nuwara Eliya teas from the tea bag sector, and together with an improvement to quality prices advanced Rs 10 to Rs 20. More importantly there were hardly any unsold teas.

Bright Uva BOP/BOPFs continued to sell well on special inquiry with a line of Uva Highlands BOP selling at Rs 1000. Others were Rs 5 to Rs 10 dearer.

Select Best Low Grown CTC PF1s too advanced following special inquiry with a line of Kalubowitiyana PF1 fetching an All Time Record price of Rs 620. There was good demand for the brokens with price gains of Rs 10 to Rs 15. High and Medium CTC PF1s too advanced Rs 10 to Rs 15 on average.

The 3.2 mkgs of Low Growns that came under the hammer this week met with wide spread demand. In the Leafy category, BOP1/OP1s were mainly firm, however the bold Pekoes eased a few rupees, on account of restricted Syrian buying. OP/OPAs were mainly firm.

In the Small Leaf category, the select best FBOP/FF1s were fairly steady, others declined several rupees. At the bottom end prices eased following less inquiry. Most traditional markets were operative.

Western Teas

Select Best BOPs advanced Rs 10 to Rs 15, other good invoices gained Rs 10, Below Best sorts were irregular, plainer varieties were firm. Select Best BOPFs advanced Rs 10 to Rs 15, other good invoices gained Rs 15 to Rs 20, Below Best sorts too were Rs 10 to Rs 15 dearer, plainer varieties gained Rs 5 to Rs 10. Medium BOPs advanced Rs 10 to Rs 15. BOPFs gained Rs 5 to Rs 10.

Nuwara Eliya Teas

BOPs gained Rs 10, whilst BOPFs advanced Rs 15 to Rs 20 on average.

Uva Teas

Bright BOP/BOPFs sold well on special inquiry, others gained Rs 10 on average. Uda Pussellawa BOP/BOPFs advanced Rs 10.

CTC Teas

Select Best Low Grown PF1s advanced Rs 10 to Rs 20 on special inquiry, others declined by a similar margin with a fair volume remaining unsold. High & Medium PF1s advanced Rs 10 to Rs 15 on average. All BP1s gained Rs 10.

Low Growns

Fair demand. Select Best OP1s declined Rs 20 to Rs 40, whilst the Best OP1s maintained last levels, Below Best and poor sorts were irregularly lower by Rs 5 to Rs 10.

Select Best along with the Best BOP1s were steady, clean Below Best types advanced sharply by Rs 10 to Rs 15, others tended lower by Rs 5 to Rs 10. Select Best OPs were firm, Best types were irregularly lower by Rs 5 to Rs 10, Below Best types maintained last levels, poor sorts were lower by Rs 5 to Rs 10. Select Best OPAs shed Rs 20 to Rs 40, Best types too were lower by Rs 5 to Rs 10, Below Best types were fully firm, poorer sorts eased Rs 5 to Rs 10 and were mainly unsaleable due to lack of sufficient bids. Select Best Pekoes appreciated Rs 10 to Rs 20, however the balance declined Rs 5 to Rs 10 and more at times. Shotty Pekoe1s were fully firm, the balance shed Rs 5 to Rs 10. Select Best and Best BOP/BOPSPs were firm, Below Best and poorer sorts were lower by Rs 5 to Rs 10. Select Best and Best FBOP/FBOPF1s shed Rs 5 to Rs 10, Below Best and poorer sorts were barely steady. Select Best Tippy sorts maintained last levels but all others eased on last levels.

Off Grades

Select Best and Best liquoring Fngs1s were easier by Rs 5, Below Best and poorer sorts were at last levels. Select Best and Best BMs were firm at last levels, Below Best and others eased Rs 5 from last. All Low Grown Fngs eased by Rs 10 to Rs 15.

All BPs were firm to dearer by Rs 5 to Rs 10. Select Best and Best BOP1As were firm to dearer by Rs 5, Below Best and poorer sorts however were lower to last by Rs 10 to Rs 15 and more at times with low demand.

Dust

Select Best Dust1s were firm, other Dust1s in the Best and Below Best category appreciated Rs 10 to Rs 15 but declined by a similar margin towards the latter part of the sale, poorer sorts shed Rs 15 to Rs 20. Clean secondaries were firm, whilst the balance declined Rs 10 to Rs 15. Best Low Grown Dust/Dust1s declined sharply by Rs 20 to Rs 25, whilst the balance were irregularly lower.