Sri Lanka Tea Production Exceeds 320mn Kg with Highest Prices Recorded

10th December 2010, www.lankabusinessonline.com

Sri Lanka's tea production is expected to hit a new high this year, exceeding 320 million kilos despite recent shortfalls owing to bad weather, while prices are also at record levels, brokers said.

The average tea price at the Colombo auctions up to end-November of 369.38 rupees a kilo was the highest ever, and almost 10 rupees or 2.75 percent above that of the same period last year.

"We could expect to see Sri Lankan tea sale averages in 2010 achieving an all-time high compared to the previous best of 360.45 rupees in 2009," brokers John Keells said, with just two more auctions left.

Unusually heavy rain drenching parts of the island, including tea growing regions, could retard growth of tea bushes, and the December crop could be below the same month of last year.

"However, November production has been satisfactory, and could reflect a slight positive variance," John Keells said in a report.

"Given the excellent crop in the first ten months, the yearly production at the end of December is estimated to reflect an all-time record in excess of 320 million kilos."

Prices of low grown teas, which make up more than half the crop, continue to stay high for the time of year, the brokers said.

"Low growns recording a positive variance for the month is encouraging considering that Sri Lankan averages in the second half of last year was the highest on record."

There was "excellent demand" from Russia, Iran and Iraq, while Dubai, Syria, Jordon, Saudi Arabia and other Middle Eastern countries also lent useful support, the brokers said.