Sri Lanka Tea Earns a Record High in October

04th December 2009, www.lankabusinessonline.com

Sri Lanka's tea export earnings in October hit a record high and average auction prices this year were much higher than in the last two years, although shipments were down owing to production problems, brokers said.

Prices at this week's Colombo auctions fell sharply owing to lower quality and less demand although a global tea shortage is likely to keep prices buoyant in the short term, they said.

Brokers Asia Siyaka Commodities said October tea exports from the island fell marginally to 25 million kilos from a year ago.

"The rupee value of exports in October 2009 is the highest ever at 13.3 billion rupees, 17 percent more than the previous high of 11.6 billion rupees earned in 2008," they said.

Earnings for the year reached 110.7 billion rupees, on a quantity of 239 million kilos exported, down six percent on the 2008 record earnings of 118.9 billion rupees earned from exports of 270.8 million kilos.

The approximate US dollar value of earnings for the January-October 2009 period was 963 million, 12 percent lower than in the same 2008 period.

But brokers said average prices at the Colombo auctions have stayed much higher than in the last two years owing to a global shortage caused by production shortfalls in key producing countries, especially Sri Lanka.

At the sale in the last week of November the average price was 3.37 dollars a kilo compared with 2.03 dollars at the same sale in 2008 and 2.88 dollars a kilo in 2007.

The year-to-date average price of tea was also higher at 3.14 dollars a kilo compared with 2.91 dollars in 2008 and 2.45 dollars a kilo in 2007.

Forbes & Walker Tea Brokers said there was less demand at this week's auction and consequently lower prices all round.

In teas from plantations company estates overall quality levels showed a decline resulting in a greater volume of teas on offer comprising of "Fair Average Quality", they said.

"Consequently, the price parity between the better teas and the below best varieties narrowed down, whilst the increased volumes continued to put downward pressure on prices for all others."

Prices of low grown teas, which account for the bulk of the crop, also fell, dropping by 10-15 rupees a kilo for most types.

Image courtesy of lakdora.com