Traders hopeful of better tea prices
Japanese demand for Western quality teas have pushed prices for these teas to levels not seen recently and the current upturn in prices is not solely due to the drought-hit Kenyan crop, tea traders said last week.
Anil Cooke, President of Asia Siyaka Tea Brokers believes that as the current quality season moves forward, Ceylon Tea prices will move up.
The Forbes and Walker weekly tea report said that Kenyan teas – with supplies depressed by drought-hit production – were currently selling at USD 4 per kilo while Ceylon’s were slightly lower at USD 3.96.
Freak rains in January, though not sustained, helped moisturize soil conditions which assisted crop somewhat. Cooke said dry weather in January was normal. Expectations were Western teas and Nuwara Eliya’s would produce optimum quality teas which would sell well.
Japan is expected to feature quite prominently at the Colombo auctions following quality from the Western slopes. Although we reported last week that Japan had reduced intake of Ceylon tea, enquiries from Japan indicates resumed buying in Colombo with brokers optimistic that Japan will absorb over seven percent of Sri Lanka production.
Traders also reported that the tea habit in the US was growing. Currently, Argentina supplied 54 percent of US tea imports which mainly went into the iced tea market. But Argentine tea was poor quality, brokers said, and good quality Ceylon teas have found space on US retail shelves. in the US. The traditional tea habit was gaining ground and brokers expected tea import from Sri Lanka to the US to move up. Currently US imports of Ceylon tea is about five percent of the total.
World crop statistics were that Sri Lanka, Kenya, South India, and Malawi registered crops below the previous year while Bangladesh and North India recorded crop increases.
The Lipton instant tea plant located in the Agarapatana valley continues production. There is speculation about another player entering the instant tea segment but details are unavailable.
Value added exports of black tea and the increased production of green tea would have salutary influences on Ceylon tea exports, traders said. Additionally, increase in tea bag exports would also account for increased value of Ceylon tea.
Brokers were optimistic market conditions signaled increased prices with good demand seen from shippers to Turkey, Iraq, CIS, Dubai, Kuwait, and Saudi Arabia.
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