Steep decline in tea prices

Lower priced teas too expensive;
buyers turn to Kenya and Darjeeling

By Steve A. Morrell -Island

A leading broker, who refused to be quoted, said because Ceylons were too expensive relevant to lower quality available, buyers who usually supported our tea have turned to Kenya and Darjeeling to fill their orders. To compound the depression, Western BOPFs sank to alarming depths recording prices of Rs. 60 to 80 per kilo below last week’s levels.

‘This is very bad news’, was the gist of John Keels Tea report this week

Some rain has been reported in Western planting districts which brokers opine could have limited impact on crop. Forecasts point to serious depression which might have desultory results in the short run. Long-term indicators, too, are not quite encouraging.

Planters said: ‘Some rain, yes, but January and February are traditionally dry, and because dry weather would continue, all else being equal, consequences of the strike would be felt in the immediate future. These would be short- term projections which could not be avoided’.

Added to these woes Low Growns which had not been positively affected by the wage strike too have recorded crop drops because of the serious drought in the Southern hills of Galle and Deniyaya.

Speculation which has led to this depressing trend could be attributed to large-scale encroachment of the forest cover depriving the adjunct eco-system of its sustaining moisture levels.

We have been reporting on seriousness of encroachments in this area, and also in the environs of Warwick Estate bordering the Horton Plains. Our periodic references to minus repercussions, that would result should legal controls not be enforced, have now been justified.

Brokers said that in the thick of this depressing situation two estates have achieved record prices .

Laxapana at the foot of the Peak wilderness sold a BOPF for Rs.540 and Kenilworth in the lower elevations at the Ginigathena Pass sold a Pekoe 1 for Rs.360.

Laxapana is a holding owned by Maskeliya Plantations Ltd. and Kenilworth is owned by Watawala Plantations Ltd.

A significant feature of the sale this week was that both the UK and Continent were relatively silent. Both these international markets were usual supporters of Ceylons at this time of year, but the strike residue prompted their limited buying. Gainers from the tea land strike last month will prove to be Kenya and the high elevation estates in Darjeeling, India.

We reported last week that Kenya has emerged from the long drought which had depressed their crop. However, indicators are that this year the tea industry would see boom times and it would not be wishful thinking that Kenya would progress to be the leading tea exporter in the world. ‘So much for Ceylons seeing any gains this year’, brokering sources said.

According to the Asia Siyaka Tea Market report this week, Unilever, the parent company of Lipton’s, would invest $130 million in Russia said Vice President of Unilever’s European Supplies Department Peter Emsting. The significance of this move would be that Ceylons would be affected. ‘Unilever is already in Russia’, said Anil Cooke of Asia Siyaka Tea Brokers, Ltd. We would have more news on this expansion next week.

Meanwhile, quite within context of our Tea Board report last week, the chaotic situation obtaining in that department because of protracted infighting instigated by its Chairman will have a regressive impact on the tea industry.

At this week’s sale there were approximately 4.3 million kilos on offer.

Tags: Ceylon Tea, Tea News, Business, Tea