Turkey’s economic fallout dips Ceylon tea demand
There has been a drop in demand for Ceylon tea’s low grown and mid grown Pekoes as a result of the current economic and financial crisis in the Turkish market, the largest buyer of Ceylon tea.
The current currency crisis in Turkey is having an impact on tea buying as well with a “slackening demand for the grades that are traditionally shipped to the Turkish market”, Asia Siyaka Commodities MD Anil Cooke told the Business Times.
He noted that the choice of low grown and mid grown Pekoes is the tea that is picked up by the Turkish market. These Pekoes are considered an important grade in orthodox tea since it is in high value with a high density product.
The Turkish Lira is going down now and the currency is in a crisis and commentators have reportedly stated for years that the economy is likely to collapse.
Turkey has been pursuing an aggressive interest rate hike policy in a last-ditch attempt to rectify the country’s long years of unorthodox policymaking that has left many Turks struggling to afford food and other basic goods. Te Lira has depreciated by over 50 per cent against the USD last year and has also been ranked as the second-worst performing emerging market currency, following the Argentine peso, according to the Trading Economics.
With purchasing power dropping and retail prices of goods in the Turkish market increasing there has been a drop in the buying of Ceylon Tea as well.
“Ceylon Tea has become expensive,” Colombo Tea Traders Association Chairman Sanjaya Herath told the Business Times.
He said the Turkish economy was buoyant for some time but lately it has declined and with the freight rates increasing from US$1800 to US$4300 tea has become more expensive.
As a result, most of the cheap Indian teas have been creeping into the Turkish market due to the price levels including some of the Vietnam teas, it was pointed out.
And with the onset of
the Ramadan months consumption has become low and demand
has reduced.
The Turkish community favours Ceylon Tea so the demand for the product is likely to continue, it was noted.
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