Our pre- budget comments last week included dwindling crop prospects universally; that being the Small holder sector as well as Corporate Holdings. Additionally apart from Russia, or CIS countries who absorb about 24 % Ceylon Tea new markets have not been pursued. 2009 being a bad year, we now tend to pat ourselves on the back that things are not too bad this year.
The Asia Siyaka Weekly Tea Market report, last week said Rupee earnings were at their highest end May at 57.7 Billion
Although Dollar earnings receded marginally this year from $ 506.9 million last year, ( 2009)to $505.9 million this year ( 2010)indicators were that there was no serious concern that impending gloom could overtake the industry.
Budgetary expectations were largely non- starter indicators. Expected relief was not mentioned in real terms . Whether the Small holder sector will receive some relief is still in the balance.
Additionally Government financial allocations have not as yet been sensitive to the need to open new markets. Naturally this will; need money, Brokers said. But this may or may not see the light of day was general consensus.
Our unquotable consultations with the Tea Board was their confirmation that the Small Holder Sector yields were declining; presently, marginally. Tea Small Holders they said produce approximately 72 % of total crop produced. The corporate sector producing the minority quantity of about 28 %.
Competition from producing countries, particularly Kenya, continues to grow. They have effectively shut down strong Ceylon Tea markets; for instance the UK, Pakistan, and Egypt, out pricing our Tea products, consistently.
Quoting from the Tea Board of Kenya, the Asia Siyaka report also said Kenya production topped 179. 8 million kilos January to End May this year. Sri Lanka performance the same period stands at 115.3 million kilos. Viewed collectively it seemed plausible that Kenya could produce cheaper Tea yet maintain good quality.
Quality of Ceylon Tea is not in question, Brokers said, but produced at what cost? This fact alone veered buyers away from Colombo.
Last week all auction Centers in the Tea world reported good demand.
Eastern Brokers reported Bangladesh, Chittagong, was strong, so too Guwahati, selling Assams. CTCs sold well in Kolkata, with Mombasa continuing vigorous market demands. Colombo too was no exception. Brokers said Colombo was good.
Meanwhile Lanka Commodity Brokers reported Uva ‘Kachan’ winds have started signaling the commencement of the Uva season. Prices will improve further they said.
Brokers also said they expect flood of seasonal buyers to dominate Uva Tea buying, Previous price records might tumble they said. Particularly the Malwatta Valley, bordering the Bandarawela plateau, and lower elevations in the Lunugala Basin. They also said good prices could be expected from the Upper reaches of the Madulsima highlands. We were unable to have situation weather reports from Estates in the Uva District or the Ella gap; but all told expectations were good.
This week 7.7 million kilos will be on auction. The market will remain strong., Tea sources said.
source - www.island.lk
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