Sri Lanka Tea Earnings Top and Tea Futures Considered

26th September 2010, www.island.lk, By Steve A. Morrell

The Sri Lanka Tea Board ( SLTB), through their crop results analysis last week said production returns to end August at 221.2 million; was approximately 39.3 million kilos above last year, the same period.

John Keels Weekly Tea Market report recorded that apart from crop successes, forex earnings would move up to ‘never before’ levels, and the year would end with Tea earning Over 1.3 Billion Dollars in foreign exchange. (Forex).

Brokers’ reports received by us confirmed this forecast and universally what they said was positive impacts of Ceylon Tea would continue to influence the Tea world quite considerably. They were however cautious labeling ‘Ceylons, the best’, tag line, but although reality was that that was not so ‘We will get there’, they said.

SLTB analysis indicated low growns continued to dominate production. Low growns as recorded in these columns quite often, are mostly small holdings held by the rural ‘Appuhamys, and Menikes’, approximately 400,000 in number, who produce greater volume to ensure Sri Lanka retains upper level status.

High grown volumes were recorded at 53.7 million kilos to end August. Mid grown elevation Tea mostly located in Matale, and the lower reaches of Nawalapitiya and Pupuressa, had production returns of 38.2 million kilos.

The Tea Board report further said orthodox teas including Bio, Instant, Reclaimed, and CTC production was 206.8 million kilos. Green tea also included in the auctions, was 2.2 million kilos.

These returns were significant to forecast tea successes.

However an interesting feature last week, as informed by Ceylon Tea Brokers PLC, Tea market report, was that ‘Tea Futures", would soon be an integral part of Tea marketing strategy.

Quoting from ‘Tea Futures’, the report said The Tea Board of India was speculating the introduction of futures trading in Tea mid way in their 12th five year plan. Roshini Sen Deputy Chairman Tea Board informed the media futures trading in Tea was eagerly awaited by the industry at large, but lack of uniformity was delaying its application.

India produces approximately 979 million kilos annually, second only to China who produce 1.3 billion kilos . Sen Said Tea futures would not only support prices, but provoke transparency to the existing price mechanism. India’s per capita consumption in Tea was modest at 750 Grams per annum, followed by Pakistan, and Germany (700 grams).

The UK consumption figure was 2 billion cups per annum.

Lanka Commodity Brokers said ‘Although we like a situation where the market strengthens progressively more realistic assessment would no doubt make us realize it cannot go on indefinitely’.

The report said low grown Teas last week, were lower as prices fell. Demand from Turkey Saudi Arabia, and Iran was selective.

Russian buying interests were sustained.

Top sellers included Waltrim, in Lindula, Tymawr, (Frotoft) in the upper reaches on the Nuwara Eliya, road ,Laxapana, at the foot of the peak wilderness. And Glentilt in the Maskeliya sub district. Also included are Lovers Leap, (Pedro) on the Nuwara Eliya town border, and Mahagastota, also in Nuwara Eliya.