Business tea report

Low grown teas impressive

Bartleet Tea Surveillance report upto March 5:

The quantity of tea arriving at the Colombo Auction this week increased to 6.386mkg from 6.251mkg traded in the previous sale.The ex-estate crops showed an increase from 0.814mkg to 0.943mkg.

Market segments: In the Ex-estate segment, Dimbulla Seasonal BOP teas were dearer as quality varieties were being sort after by Japan and the UK while the below best were firm to dearer. Russia too was quite active in buying.

The quality of the tea was quite satisfactory and with the up coming higher quantities, a slight price drop could be expected. The Tippy market segment witnessed a fair demand with the CIS and Iran moderately active whilst Dubai and Saudi Arabia were very selective.

In the Leafy-grade segment, low grown teas saw a remarkable improvement in prices in almost all the grades. Shippers to Germany were buying OP1 and BOP1 grades in a rush. Whilst inquiries from Syria and Turkey improved the prices of the Pekoe grades further.

Tenders and private orders to Iraq were continuing as the OP and OPA grades continued to fetch high prices.

Tea statistics: According to Tea Board data, Sri Lanka was in the third position of tea producing countries after China and India in 2006 whilst it held the number two slot in the world as exporter. Data also revealed that average tea prices at the Colombo auction had risen by more than 40 percent last year to $2.74 per kilogram.

By comparison, Kenyan production shot up to an all time high of 369mkgs thereby displacing Sri Lanka from its number one exporter position with a volume of 345mkg. However, the revenue figures of Kenyan tea shows a drop of $0.639 million in 2007 as compared to $0.652 million in the previous year.

Opportunities in Egypt: Egypt, one of the largest CTC markets is being eyed by Assam’s tea industry due to the Kenyan turmoil that is affecting volumes according to sources.

The market for tea in Egypt is estimated at around 75mkg and 90 percent of the demand is met by Kenya.

By comparison, Indian tea including crops from Assam enjoys a market share of only 2.7 million kilograms which is only 3.6 per cent.

It has been revealed that some industry elements are trying to utilise the current Kenyan situation in order to make inroads into the Egyptian tea market which has implemented a duty reduction from 30 percent to a mere two per cent. Out of Assam’s total production, almost 93 per cent is CTC teas.

The Egyptian market has a one kilo per capita consumption against 700 grams per capita consumption in India.

Bull market: According to a United Nations Food and Agriculture Organisation (FAO) officials, “tea will be a bull market in 2008”. This is due to the change in market fundamentals and countries which are from the Middle East who are enjoying a higher disposable income through the oil price hike.

According to a leading tea exporter the value added forms are selling 40 percent more than a year ago.

Plantation stocks: Positive forecasts are boosting interest in Sri Lanka’s tea plantation sector shares which in turn have helped reverse the stock market’s seven percent drop in January.

The plantation sector sub-index had risen up more than 21 per cent. With reference to the weekly surveillance of the 19 plantation stocks, five was high in value whilst 12 were low and two reported static. Udapussellawa, Hapugastenna and Kahawatte plantations witnessed a gain of 17, 9 and 6 per cent respectively week on week.

Weekly average price movements

Western high growns Select best western BOP’s lost by Rs. 10.20 per Kg and more following quality others were irregular. Below best and plainer sorts were firm and Rs. 5-10 per Kg dearer. High priced BOPF’s of last week loss Rs. 10 per Kg others were irregular following quality improved below best sorts appreciated upto Rs. 10 per Kg others together with the plainer sorts were firm and dearer to a lesser extent.

Nuwara Eliyas

A few selected Nuwara Eliya BOP’s appreciated following air mail inquiry. Others lost by Rs. 10-15 per Kg. A few selected BOPF’s invoices appreciated substantially following special inquiry others lost by Rs. 5 per Kg.

CTC

The general demand for BPI’s gained by Rs. 5 per Kg. High grown PF1’s were irregular and barely steady whilst the medium grown PF1’s gained Rs. 5-10 per Kg. The low grown PF1’s declined Rs. 5-15 per Kg.

Western Medium Growns

High priced teas were irregular. Others were fully firm and upto Rs. 5 per Kg dearer whilst BOPF’s gained Rs. 5-10 per Kg.

Uva/Udapusellawas

Udapussellawa BOP’s declined by Rs. 5-10 per Kg whilst the BOPF’s followed a similar trend.

Off grades: Liquoring FGS/FGS1’s met with lesser demand and were lower by Rs. 5-10 whilst cleaner BM/FGS’s were lower compared to last levels.

Dust: Best liquoring DUST/DUST1’s were irregularly lower by Rs. 5-10. Medium DUST/DUST1’s were lower by Rs. 2-4. Low growns met with last week levels.