Tea auctions this week

Improved demand for liquoring teas

A smaller volume of 2.8 Mkg of Low Growns that came under the hammer this week had wide spread demand, but at lower levels. In the Leafy Category, Select Best OP1s declined several rupees, however a few below best invoices gained following additional inquiry, whilst the poorer sorts were mainly firm. The well made BOP1s were marginally lower, others too declined several rupees. The best and the below best OPAs declined several rupees, however, the poorer sorts maintained last levels. The best Pekoes on offer, were mainly firm, but all others declined Rs. 2/- to Rs. 4/-. The bolder varieties in particular, saw less inquiry. In the Small Leaf category, select best FBOP/FF1s were sold around last weeks levels. The below best sorts advanced Rs. 3/- to Rs. 5/-, particularly towards the latter part of the sale. Once again, the best Tippy varieties declined Rs. 20/- to Rs. 30/-, others too met with a lower market. There was excellent demand from Russia and Libya, whilst Iran, Turkey, Syria, Jordon, Iraq, Saudi Arabia and other Middle Eastern markets too lent useful support.

Elevation averages for the month of October shows a positive variance when compared with last year for all elevations. The High, Medium and Low Growns for the month shows a positive variance of Rs.20.64, Rs.19.60 and Rs.9.09 with the total recording a pus of Rs.12.82. The cumulative average for January/October also shows a positive variance for all elevations at Rs.34.54, Rs.13.21 and Rs.3.41 respectively, with the total national average recording a plus of Rs.12.62.

The Ex-estate quantity on offer was marginally lower to last week at 1 Mkgs. There was improved demand at the commencement of the sale, particularly for the Western High Grown BOP/BOPF in the below best category where prices advanced by Rs.5/- to Rs.10/-. A few select best BOPs appreciated Rs.2/- to Rs.5/- whilst a few BOPFs gained Rs.5/- to Rs.8/-. The plainer BOPs were of an easier market whilst BOPF maintained. Nuwara Eliya BOP/BOPF was of a slightly lower market whilst a few Uva coloury BOPs sold well, others along with the BOPF declined Rs.4/- to Rs.6/-. The Low Grown CTC PF1s appreciated Rs.5/- to Rs.10/- and more at times whilst High Grown PF1s were irregularly lower. BP1s on an average were firm to a few rupees easier. (John Keells Limited)

Tea auctions this week

A total of 6.0 m/kgs came under the hammer this week.

Ex Estate offerings totalled a 1.0 m/kgs. It was heartening to witness the turn around in the market particularly for the better teas, which appreciated Rs.5-10 per kg all round, creating a significant price parity between the better teas and their poorer counterparts. The price movement at this week’s Mombasa Tea Auction also followed a similar trend endorsing the greater demand for better quality teas. Therefore, the current price parity would no doubt be encouraging to producers to focus on product quality at the first available opportunity to secure better performance on estates. The tea bag sector continued to be dominant on a cross section of the BOPFs on offer whilst shippers to UK, Japan and the Continent continued to selectively absorb the better liquoring teas.

Low growns continued to witness a similar trend which is rather discouraging for producers of good quality teas. The feature at the Low grown sale of yesterday was the wide spread demand that was evident for teas at the lower end of the market. This week too the better teas were mostly lower with buyers being very selective. This was quite evident in the OP/OPA grades as the parity between the better teas and the bottom end teas have narrowed considerably. There was fair demand from Iran, Dubai, CIS and selective inquiry from Saudi Arabia. (Forbes Tea Brokers)

MONTHLY AVERAGES – OCTOBER 2006

The total sale average for October of Rs.210.68 per kg shows an increase of Rs.12.82 or 6.47% growth compared to Rs.197.86 per kg of October 2005. It is also relevant that all categories of tea have recorded increases for the month with the High growns ecording an increase of 11.4% followed by Medium growns of 11.2% and the Low growns of 4.3% compared to the corresponding month.

In analysing averages for the period January-October the total cumulative figure for the year 2006 too shows a growth of 6.9% compared to the corresponding period. It is also significant that all categories have shown a growth compared to the same period of last year. -Daily Mirror FT

September Tea crop (Supposedly) a record

Auctions automation has come up again. Brokers and producers comment
‘Don’t mess with the system’
By Steve A. Morrell

The Sri Lanka Tea Board in their latest release said that crop intakes for September this year have been highest on record.

All well and good, but at what cost, is the question. We have spoken to 2 Brokers, Director Ceylon Tea Brokers (Pvt) Limited, Russell Tennekoon, and Deputy Chairman Asia Siyaka Commodities (Pvt ) Ltd., Anil Cooke who conceded that although they did not dispute the Tea Board report, they had their reservations on quality of produce sent down to the auctions. Also in question was the phenomenal upsurge in low grown production which were mostly small holder units.

We reported about 2 months back that there were approximately 380,000 small holders managing a collective area of 400,000 hectares more or less, of legitimate tea land. (Irrespective of land tracts encroached into the Sinharaja Forest, which has now been denuded, of just about 15 per cent of this eco system, and producing unaccounted crop for the tea area officially declared).

Both Brokers said that herein was the crunch, in that quality of leaf was much to be desired. Drop in leaf standards is camouflaged by the most expensive machine installed in factories called colour separators.

Russell Tennekoon said these machines cost as much as 15 million, and quite apart from artificial treatment of leaf, the problem of refuse tea percentages increasing was now causing anxiety. This was more prevalent in low grown production, they said. Refuse tae production was presently at about 15 per cent, which is substantial.

They said that previously refuse tea percentage was not more than 2 or 3 per cent. Phenomenal increase would need critical enquiry and a clearer picture should then emerge.

The tea board reported that September production was 28.02 million Kilos, which recorded highest for the Month.

However the same report also indicated drop of 2.83 million kilos for the recorded period.

The Tea Board controversy over suspended Director general H.D.Hemaratne, has now been relegated to the confines of limbo. We learn there was no charge sheet issued and his suspension with full pay continues.

Automation of auctions has come up again. In this instance too we consulted at least two from buyer locations who said ‘Don’t mess the system’. The auction system as run presently has not caused major dislocation an as it is now conducted should be continued, they said.

Total crop sold this week was 6.4 million kilos. Prices have not been quite that exciting. Decline in prices were recorded in all three elevations.

Although Kenyan tea production has not improved and continues to lag behind, Ceylon tea has not scored quite significantly to merit honourable mention.

-The Island-

Tea exports up in September

January-September volume up 8.4%, value up by 13.9%

Sri Lanka’s tea exports during the month of September ’06 totalled 26.5 m/kgs vis-à-vis 30.6 m/kgs during the corresponding month last year. During the month under review, however, the average unit FOB value for a kilogram of tea totalled Rs.284.44 whilst the corresponding figure was Rs.254.43. This reflects an increase of Rs.30.01 or 11.79% over the corresponding figure.

In analyzing the teas exports for the period January-September ’06 a total of 244.6 m/kgs have been exported this year compared to 225.5 m/kgs exported during the same period last year.

During the period under review we have recorded a growth of 19.1 m/kgs in volume whilst an increase of Rs.8.2 billion in value over the corresponding figure.

The CIS continued to be the single largest importer of Sri Lankan tea having imported 57.9 m/kgs for the period January-September ’06, an increase of 7.5 m/kgs vis-à-vis corresponding figure of 50.4 m/kgs, followed by UAE with imports totalling 34.5 m/kgs and in the third position Syria with imports amounting to 23.1 m/kgs. FORBES & WALKER TEA BROKERS (PVT) LTD

-DM Financial Times