Sunday, December 30, 2012
2013 expected to be good year for tea
by Steve A. Morrell
In an encouraging development, tea sales in November and December 2012 have reflected some positive indicators that 2013 would be good for this key export commodity.
Brokers last week agreed they had never had below ‘red line’ performances irrespective of bad times that had overtaken the estate sector in the past, even in extreme minus situations. Shippers too didn’t have it really bad. No tea trading company or tea broker had so far closed down or declared insolvency.
The Sunday Island also sourced information from the grower sector. The small plots responded that subject to each plot being worked by family units, were able to sustain themselves and keep their heads above the water.
The larger small holders who had sufficient tea land to also run their factories were indebted to banks for their livelihood. Their income levels were crisis-stricken because of their substantial wages bill.
The formal estate sector, or the Plantation companies, collectively said their costs were high, and although prices were good, were unable to translate such prices to profits because of continuous costs which continued to plague their existence. In most instances, costs exceeded Rs. 400 per kilo.
JKH Tea Brokers reported in their pre-Christmas Tea Report, that collective tea sales averages for December were Rs. 424.63. They conceded that although these prices were good they would not comment on the estate sector viability.
Brokers agreed that the first sales of 2013 would clearly indicate that prices would move up, and possibility that Colombo could record Rs. 600 averages in the short term could not be ruled out.
Hasitha de Alwis, Director, Marketing Sri LankaTea Board, said he agreed black tea prices would increase first quarter, 2013. Supporting his assertion, he pointed out that currently Kenya, India, Indonesia and some other black tea producing countries had all shown deficit crop returns. Sri Lanka would also be a deficit producer, but only about one million kilos, which was not much.
World deficit in black tea was about 70 million kilos. This would naturally translate to increased prices.
The Tea Board also commented that China had surplus production of 135 million kilos in green tea. Exports from China were mainly concentrated to Morocco, Uzbekistan and a few other countries. But, this hardly dented their prices because 75 to 80 percent green tea production was consumed locally.
Additionally, Russia, CIS countries and strengthened Gulf States buying, further buoyed upward price trends for black tea, which would be sustained, these brokers said.
Pakistan had shown more positive interest. Pakistan was one of Sri Lanka’s major buyers until they were attracted by lower prices from Kenya. They, however, would not comment if increased Pakistan buying would be sustained.
Uva and Western High growns sold at Rs 439.86 per kilo. Expectations were that with the on-set of the western quality season setting in, with bright weather conditions reported from these elevations; cold nights and wide hygrometric differences would herald good quality. These phenomena were indicators that prices would move up, optimistic brokers predicted.
source - www.island.lk