The first tea auctions for 2009 made a good start this week with price increases in almost all categories. “The auctions went better than even we expected. Prices increased in almost all categories on offer. Average prices were around the Rs 250 range, and some categories saw price increases of Rs 30 – Rs 40,” said the Head of the Sri Lanka Tea Board, Lalith Hettiarchchi.
The Tea Board said the good prices can be sustained for the month, due to present low output. However, the tea sector is cautious about making predictions for 2009 after the sudden crash in tea prices towards the end of 2008, precipitated by the global financial crisis. Forbes and Walker Tea Brokers in their tea market review/preview for instance, is projecting a “cautiously optimistic market scenario for 2009.” The broker noted that “cautious optimism for the tea market in 2009 must be linked with the accent on maintaining a reasonable and consistent quality throughout the year.”
Tea markets are expected to do better at the beginning of the year due to a combination of exxternal factors that cause supply reductions to international markets. Increasing domestic consumption of tea in India and China is expected to reduzce supply of tea for the export market. Global tea output itself, hits a bad patch during the 1st quarter of the year because North India is in winter and Kenya and South India experience dry weather during this period. Therefore, weekly auction quantities, particularly in February and March, are likely to be low. However, Sri Lanka experiences a traditional ‘Western quality season’ at this time of the year, which usually attracts additional demand for these seasonal quality teas.
Finally, tea is believed to be one of the few commodities that will survive a global recession because the spending on tea is a minute component of the total disposable incomes of consumers. Therefore, a better start of the year is predicted for the tea sector, compared to the end of 2008, the report said. |
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