Tea prices are expected to stabilise in 2009 with prices edging up to Rs 300 per kilo towards year-end, according to the latest ‘Tea Market Review and Outlook for 2009’ report from the Sri Lanka Tea Board and the Research Intelligence Unit.
Prices of low grown tea are expected to average between Rs.250 and Rs.275 per kilo. High grown tea is expected to do less well, with prices averaging between Rs.225 and Rs.250 for the first half of 2009.
“Under the given assumptions, our overall average price forecast for the Colombo Auction in 2009, is an average price below Rs.300. We expect the price to edge upwards as the year progresses and even pass the Rs.300 mark as winter buying spurs the market. Beyond 2009, the market should improve,” said the report.
High grown teas, favoured by Western countries, will find it harder to recover because these countries are more severely affected by the global recession. Demand for high grown teas is also linked to quality.
“Therefore, only the best varieties will maintain their prices whilst many of the plainer high growns will adjust downward from the 2008 average,” said the report.
But, the good news is, tea is increasingly recognised for its health benefits. So despite the recession, tea will always have a market.
No major changes in export markets are anticipated in 2009 but some recent competitor trends are flagged for observation.
For instance, during the first 10 months of 2008, Kenyan exports to the UK and Egypt rose by 24% and 40% respectively, while Kenyan exports to Pakistan and Afghanistan, dropped.
Shipments of Kenyan tea to Egypt, also showed a growth, and the report says here is a danger of Iran, Netherlands and Poland further increasing purchases from East Africa. Meanwhile both India and China have also increased tea exports.
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