Tea prices soar in ‘12

Looking back a few years, Sri Lanka’s Tea Industry recorded two milestones in its 146 years of commercial history. In the year 2010, Tea Production of 331.4 Mkgs and a sales average of Rs.370.61 (US $ 3.28) has been the highest on record.

Although production in 2012 was likely to fall short of the all time record, Tea Sale averages have set a new all time record of Rs.391.64 per kg which was Rs. 21.03 higher than the record year of 2010 and Rs. 31.75 above 2011.

This has a commendable achievement considering the fact that the general trend of declining prices from the second half of 2011 continued into the first quarter of 2012, with all three elevations recording negative variances.

This had been largely due to the Low Grown Market having to contend with increased tension in the Middle East, sanctions in Iran and also the Euro crisis.

However, the Global shortfall in Black Tea production during the year and the devaluation of the Rupee against the US dollar, had a significant impact on tea prices at the Colombo Auctions.

These were the catalyst that propelled prices and Sri Lankan averages closing the year on a high.

Sri Lanka’s sales averages for the month of December, have exceeded the Rs. 400 mark for the past five consecutive months, with an average of Rs. 424.38, which incidentally was the second highest monthly average ever recorded, with the previous best being Rs.431 in September 2009.

Once again, we see a strong performance coming from the High Grown sector of Rs. 439.08, which has boosted the overall average.

If the present trends in prices were anything to go by, we could expect to see a strong first quarter performance in 2013. Western Quality season coupled with a lower production quarter, would be an added advantage for a stronger market.