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Saturday, January 8, 2011

Brokers forecast positive outlook for tea in 2011, but threats loom

A positive outlook is being forecast for tea industry in 2011 by two brokers.

Ceylon Tea Brokers said that the outlook for the first quarter of 2011 looks positive with the global tea short fall expected to hit 130 million kilos by end April 2011.

“The severe cold winter season experienced in CIS as well as the European countries might lead to a higher consumption of tea which could lead to a strong demand for tea,” Ceylon Tea Brokers said.

However, it also said that there would be challenges for the tea industry with the cost of production expected to rise following higher electricity cost as well as the fresh wage negotiations.

“The overall strengthening of the rupee against the dollar which would be detrimental to the export earnings and the availability of cheaper other origin teas would also be a major threat to the Sri Lankan tea industry in the future,” Ceylon Tea Brokers said.
On account of these, it emphasised that improvements in the quality of tea and branding Sri Lanka tea in the global US$ 50 billion beverage market with the help of the industry stakeholders as well as the Government was key in sustaining and increasing the demand for Sri Lanka tea in the world markets.

Forbes and Walker Tea Brokers said global crop and demand dynamics combined with the customarily lower volumes during the first quarter would brew up a strong story for tea in 2011.

“Nevertheless, the optimism for the tea market in 2011 must be linked with the accent on maintaining a reasonable and consistent quality throughout the year,” it added.

Last year was a record year for the Ceylon tea industry, with annual export earnings estimated to be around US$ 1.4 and $ 1.5 billion. The overall average price for 2010 stood at Rs. 370.61 per kg, surpassing the previous highest figure of Rs. 360.45 per kg in 2009. Tea production too is poised to reach an all time high of 320 m/kgs plus, improving on the previous high of 318.6 m/kgs in 2008. Ceylon Tea Brokers said the tea market for the year 2010 surpassed the performance of 2009, exceeding even 2008. Colombo conducted 50 auctions over the year through which over 350 m/kgs of tea was offered for sale.

The Colombo Tea Auction Overall Average Price for 2010 was Rs.370.61 per kilogram, placing it as the highest on record. This is an increase of Rs.10.16 per kilogram on the previous best figure of Rs. 360.45 per kilogram realised in 2009.

Namunukula’s Eladuwa Estate creates rubber history

The Latex Crepe 1X manufactured by Eladuwa Estate – managed by Namunukula Plantations Plc – this week created history by fetching the highest ever price of Rs. 605 per kilo.
The record was set at Colombo Rubber auctions on Thursday.

It was purchased by Almar Trading Co. Ltd, one of the largest exporters of rubber in Sri Lanka.
Shehan Meegama of John Keells was the broker to the historic deal, which the company said reaffirms its knack of obtaining the best prices.

source - www.ft.lk