Tea Report

Russian interests dominate with winter buying

John Keells Tea Market Report:

While Kenya continues to prosper from good productivity and profitability, Sri Lankan Tea estates continue to struggle with low productivity and a very high cost. The land locked tea producers in East Africa such as Rwanda and Uganda that channel their teas through Kenya, are facing higher costs, particularly from transport.

Most plantations, particularly in the High and Medium elevations resumed full production after a break of three days on account of the Diwali holidays.

Although crop levels will be initially high, intakes are expected to level off, no sooner the extended plucking rounds are brought under control. In some districts, crop levels were manageable. Hence, product quality would not show a significant decline.

Very heavy rainfall has also been reported from most planting districts in the past few days. Following months of dry weather and a rapid decline in the water levels in the hydropower reservoirs and the consequent decline in power generation, the heavy rains are a welcome change.

However, this heavy rainfall could further dampen production. There have now been six consecutive months in which tea output has fallen below last year’s production.

The bidding in the Ex-Estate catalogue for high grown small leaf tea commenced on a hesitant note, with buyers being selective, seemingly unsure of the demand across the sale room.

As the sale progressed, there was more activity, particularly from Russian interests. With the knowledge that rains have now set in, buyers were eager to secure the better teas on offer, and the leading buyer of liquoring teas was seen to bid actively.

Consequently a fair range of BOP and BOPF were firm if not dearer but many others lost ground, particularly in the below best category.

Russian interest continued to be the dominant factor on the BOPF and the Russian winter buying may have reached a peak, whilst some of the pre-Christmas orders for the west may have been completed.

Colombo prices for the best BOPF are higher than the best CTC PF1 teas in Mombasa and the same goes for the medium quality teas. Hence, no sooner the demand from Russia slows down, there will be downward pressure on prices, and an increase in quantity or a drop in quality will exacerbate the situation.

The 3.2 mkg of Low Growns that were on offer last week, met with good demand. Prices for Tippy teas in particular, moved up sharply, whilst the FBOP/FF1s fared reasonably well. In the Leafy category, Pekoes, BOP1s and OP1s continued its bullish trend, however the select best OPAs declined sharply, whilst others too met with a lower market. The Low Grown Elevation given else where in this report for the month of October shows a deficit of Rs 25.58 when compared with the same period of last year. The impact from the unrest in the Middle East, North Africa and the strengthening of the rupee against the U.S. Dollar could be attributed as the main reasons for the lower average.

Fairly heavy rain fall have been reported from most Low Grown Planting Districts, hence an improvement could be seen on the intakes of Green Leaf in the coming weeks.

Western Teas

Select Best BOPs were barely steady, other good invoices eased Rs 10, Below Best sorts shed Rs 15 to Rs 20 on average, plainer varieties were irregularly lower. Select Best BOPFs were firm, other good invoices were firm to irregular, Below Best sorts declined Rs 5 to Rs 10, plainer varieties were firm to easier. Medium BOPs gained Rs 5 to Rs 10. BOPFs were firm.

Nuwara Eliya Teas

BOPs advanced Rs 10. BOPFs were Rs 10 dearer.

Uva Teas

BOPs were firm to dearer. BOPFs were firm to irregular. Uda Pussellawa BOPs were irregularly lower. BOPFs shed Rs 5 to Rs 10 on average.

CTC Teas

Select Best Low Grown PF1s were firm, others shed Rs 10 on average. BP1s were firm to irregular. A few High and Medium PF1s were firm, others shed Rs 10. BP1s were firm to dearer.

Low Growns

Fair demand. Select Best OP1s were firm to Rs 3 to Rs 5 lower at times, Best types were irregularly lower by Rs 5 to Rs 10, clean Below Best types were firm to irregularly dearer however the balance along with the poor types shed Rs 5 to Rs 10 and more at times.

Select Best BOP1s declined Rs 10 to Rs 20, the balance were steady. Select Best along with the Best OP/OPAs declined sharply by Rs 10 to Rs 20, Below Best and poorer sorts were lower by Rs 5 to Rs 10.

Select Best Pekoe1s appreciated Rs 10 to Rs 20, however the Best types were irregularly lower by Rs 10 to Rs 20 following quality, Below Best and poorer sorts were firm. Bold Pekoe varieties were firm on last levels.

Select Best BOP/BOP.SPs maintained last levels, Best types were barely steady, Below Best and poorer sorts shed Rs 5 to Rs 10. Select Best FBOPs were irregular to last, Best types were firm, Below Best and poorer sorts were lower by Rs 5 to Rs 10.

Select Best FBOPF1 were firm, Best and Below Best types shed Rs 5, poorer sorts were firm. There was good demand for Select Best and Best tippy varieties, Below Best and poorer sorts were irregular.

Off Grades

Select Best and Best liquoring FNGS1s were dearer by Rs 5 to Rs 10, Below Best and poorer sorts appreciated Rs 10. Select Best and Best BMs were dearer by Rs 5 to Rs 10, whilst the Below Best and poorer sorts were irregularly dearer by Rs 5.

All BPs sold at firm levels. All clean Low Grown FNGS appreciated Rs 5 to Rs 10, whilst the poorer sorts depreciated Rs 10 to Rs 15.

Select Best BOP1As declined Rs 5 to Rs 10, whilst Best remained at last levels, Below Best and poorer sorts too declined Rs 5 to Rs 10.

Dust

Select Best Dust1s declined Rs 5, improved teas in the Best category appreciated Rs 5 to Rs 10, Below Best types gained Rs 5 but declined towards the latter part of the sale.

Clean secondaries advanced Rs 15 to Rs 20, whilst the Below Best types were firm, poorer sorts appreciated Rs 5 to Rs 10. All Low Grown Dust / Dust1s eased Rs 5 to Rs 10 and more at times.