Market Weekly: Bartleet’s Tea Surveillance upto August

At this week auction a quantity of 6.15 mkg of tea was traded with the Ex-estate teas contributing 0.837 Mkg to the sale. The average quantity traded during July was 6.04 mkg.

The Tippy market held center-stage picking-up considerably as strong demand from Iran along with sustained interest from Dubai and the CIS drove prices in an upward direction. With Turkey and Saudi Arabia also playing an active role, this segment enjoyed overall healthy demand across the board at the sale.

The Pekoes were easier this week following eight weeks of steady gain, possibly due to the upcoming elections in Syria. However, the rest of the Leafy-grade market was met with strong demand.

A series of plantation companies have of late been reporting losses and have attributed it to the strikes and subsequent wage hikes. For some it was a continuation of loss making from the previous year whilst others have endured a turn-around in fortunes.

For instance, Bogawantalawa has moved from recording a Rs. 20 million profit to a Rs. 121.6 million loss during the financial year ending March 31.

Some in the industry have claimed that the Government has unfairly shifted its obligations of looking out for the poor onto the plantation companies who have to face the harsh realities of the free-market economy.

Data released during the past week also indicated a fall of 11.4 per cent in tea output to June as compared with the same period in 2006.

A combination of factors can be cited for the drop including drought in some regions, industrial action and the impact of high oil prices on fertilizer.

Chemical fertilizers used in Sri Lanka are derived from Petroleum products that have relentlessly spiraled in recent times. Production for the first six months has fallen from 29.52 million (2006) to 23.49 million (2007).

Research conducted by Telsey Advisory Group claims consumers want increased luxury and are now better clued-up and demanding with regard to their purchases.

The New York based group recons the current $45 billion luxury retail market will growth seven per cent in 2007. In the process, it will open up numerous opportunities for marketing speciality teas according to the study.

Of the 18 Plantation stocks monitored by RIU, four were up in value whilst six were down and eight remained static. Maskeliya Plantation stocks increased 14 per cent from Rs. 21 to Rs. 24, week on week.

The second top-gainer, Malwatte Valley Plantations recorded a six per cent gain.

Last weeks increase has been somewhat sustained this week although Talawakelle, Horana and Kotagala experienced a downturn of eight per cent, four per cent and five per cent respectively.