Tea Report

Bartleets Weekly Tea Surveillance Report upto September 5:

Tippy catalogue gains in strength

SALE number 35 at the Colombo Auction witnessed a total of 5.90mkg arriving this week as compared with 5.98mkg in the previous sale. Some 0.760 mkg of these were Ex-estate teas as compared with 0.786mkg last week.

The Tippy catalogue gained in strength during the sale as strong demand for flowery types such as FF’s and FF1 grades exerted upward momentum on prices. Iran played an important role with active buying on these grades.

Dubai and the CIS were moderately active whilst exporters representing Saudi Arabia were very selective during this week’s sale that witnessed ‘Very Tippy’ teas meeting with strong demand.

The Leafy market picked up this week across all grades except for the BOP1’s. ‘Bottom Pekoes’ in particular gained by as much as Rs. 10 per kilo whilst OP1’s also picked-up as buyers showed strong interest.

Shippers to Syria and Turkey were once again energized to their normal levels as the border between the two Middle East States reopened.

As the one year anniversary of the Sri Lanka - Pakistan FTA approaches, officials representing both sides of the Palk Straight have expressed optimism on the potential to expand trade to over a billion dollars by 2010. Currently the volume of trade between the two countries is worth around $250 million.

However, with the removal of barriers, greater quantities of Sri Lanka teas and spices along with Pakistani Honey Mangoes and Pomegranates are expected to be traded.

Competition for the Pakistan will remain fierce as Kenya is currently dominating its market whilst India and Bangladesh are also attempting to muscle in. The latter’s total exports are set to double this year, due to higher production spurred on by favourable weather according to sources.

This year’s production could reach seventy million kilo’s as compared with thirty million last year. Bangladesh’s local market is estimated to consume around 50mkg. In addition to Pakistan, the emerging tea producer also competes for markets in the Middle East and Afghanistan.

Of the 18 plantation stocks monitored by RIU, seven prices gained, seven lost and five remained static, week-on-week. Out of the gainers, Kegalle, Horana and Maskeliya showed a considerable improvement of eight, six and five per cent, respectively.

The Sri Lankan rupee has finally crossed the psychological Rs. 113 barrier against the dollar this week.

Analysts expect this trend to continue and we might even witness a rate of Rs. 114 by next week according to sources. Economists have long held the view that the rupee is overvalued and that adjustment at around Rs. 118 against the greenback would be par.