Dec 17, 2010 (LBO) - Sri Lanka's tea could see strong demand in the first quarter of 2011 as it is a low cropping period and supply and demand are finely balanced at the end of this year, brokers said.
There was good demand at the penultimate auction this week and prices were mostly firm.
"As we experience production and supply tightening up, we could end the year with the overall supply/demand equation very much on the balance," Forbes and Walker Tea Brokers said.
"In addition, the first quarter is customarily a low cropping period coinciding generally with an improvement to quality.
"Therefore, it would be reasonable to conclude that the combination of these factors would enhance the prospects for a strong first quarter in 2011."
The first quarter of the year is the time of what's known as the 'Western quality season' when teas grown on the Western slopes of the island's central massif produce their best quality and fetch high prices.
The brokers said that at this week's Colombo auction, "notwithstanding the larger volume and the relatively uninteresting quality, the overall undertone in the market was encouraging."
The limited availability of liquoring leafy teas were competed for strongly at higher prices, they said.
"With the auction being the only source of purchase, concentration of demand has led to increased price levels," brokers Asia Siyaka Commodities said.
John Keells tea brokers said crops from westerns, Nuwara Eliya and Uva regions continue to be low, while low growns have shown a slight improvement towards the end of last week.
source - www.lbo.lk
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