Ceylon Tea gains on Indian lockdown
Sri Lanka’s tea industry is cashing on the new found opportunity with neighbouring India in lockdown as Ceylon Tea was seen making price gains for the second consecutive week.
The increase in prices at the tea e-auctions for orthodox black teas was ranging between Rs.50-400 per kg as more volumes were becoming increasingly available compared to the first half of this year when volumes were low due to the drought period that existed previously.
India has gone in for a lockdown since March 24 and in this respect tea markets have also closed for operations resulting in a total lack of tea from the subcontinent.
Sri Lanka stands to gain from this lockdown as more buyers continue to pick up larger volumes to make up for the lack of teas from the Indian market.
But this is likely to be short-lived as India has reportedly commenced production about a week back although the daily attendance of workers is said to be poor.
Tea Exporters Association (TEA) Chairman Sanjaya Herath told the Business Times that since plucking on the Indian estates has been stalled for about a month the fields are overgrown and that is unlikely to yield quality tea.
However, within about four to six weeks India is likely to get their act right and that would mean pressure on Ceylon Tea prices as they (India) too will commence exporting, he noted.
Sri Lanka still stands to gain since shipments out of Colombo take only four weeks compared to 6-8 weeks from India.
Moreover, with the lockdowns in the key markets, governments in countries like Iran had forced traders to release all their stocks into the market to allow consumers to purchase the teas.
But with Iran holding low stocks there has been increased buying of Ceylon Tea including from other markets like Russia as well.
Ceylon Tea has been holding out high prices for the better teas, Mr. Herath noted, which were selling well over Rs.1000 per kg especially the low growns.
“We must get back to normalcy as soon as possible,” he noted adding that with India likely to open up within two to three weeks things should return to normal especially with more vessels calling over as there is currently a drop as shipping lines try to consolidate the cargo.