Financial Times

Tea prices seen rising as volumes fall sharply
Ceylon tea prices are expected to rise as quantities on offer fall sharply and buyers from most markets step purchases. Lanka Commodity Brokers was upbeat about the market prospects for Colombo auction teas that will be on offer during August through to October.

“Crop levels are showing a decline in the growing areas, and the auction quantities have already started to decline,” said Sarath Sirisena, Director/CEO of Lanka Commodity Brokers.

The auction catalogues for the sale of August 16-17 indicate a weight of 5.9 million kg is on offer, a drop of approximately 675,000 kg over the sale quantity of the previous auction catalogue.

Sirisena said he was in particular concerned with the sharp decline in crop harvests from the Central Province and Uva/ Uda Pussellawa plantations, where some estates have reported a lowering of yields of up to 50 percent.
“Most markets are expected to step up purchases of Ceylon teas in the weeks to come, and with improved and stronger marketing conditions chasing a smaller availability of teas, the stage is set for more lucrative prices,” the brokers said in a statement. The quality of auction offerings during the forthcoming sales will be improved. Forward samples examined and tasted at Lanka Commodity Broker's tea tasting room revealed that Uva teas were much brighter, and had seasonal character.

However, Uda Pussellawa's showed some degree of inconsistency, possibly on account of the dull and overcast conditions these estates have had during the past week, the brokers said.

The Low Growns overall showed a much improved leaf style which will no doubt attract the interest of buyers operating at the top end of the market.
Sirisena pointed out that the Colombo tea auction prices were bullish during the first quarter this year, where teas of every elevation category performed exceedingly well, fully overtaking the averages recorded during the corresponding quarter of last year.

During January-March, 2005, the Colombo auction average was Rs. 194.73. This was Rs. 29.97 higher than the average of Rs. 164.76 realized during the first quarter last year.

However, a reversal of fortunes took place during the second quarter this year, where the total auction average declined to Rs. 175.81. The July auction averages show a steep decline of Rs. 11.72 in the averages of high grown teas compared to July 2004, whilst medium grown teas have declined by a marginal 30 cents.

A month-on-month comparison for July, 2004/2005 shows that the Low Growns have, in sharp contrast to the other elevations, thrown up an average of Rs.182.66 for last month which is Rs. 2.98 higher than the corresponding month last year.

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