Nov 05, 2014 (economynext) – Sri Lankan tea prices fell in October, dragged down by Low Grown teas which account for the bulk of crop and are much in demand in Russia whose buying power was hit by a weaker rouble, brokers said.
The auction average for the month was Rs447.91 a kilo, down Rs46.97 from a year ago, although up Rs8.40 from September 2014. In US dollar terms too the total auction average for October 2014 of $3.44 was down $0.34 from a year ago.
Although High Grown teas gained from a year ago, Mid Grown and Low Grown averages were lower, with the latter suffering a "significant decrease" of Rs71.32 compared with 2013 and 53 cents in US dollar terms.
Forbes & Walker Tea Brokers said Low Grown types declined Rs20-40 per kilo at the November 3-4 Colombo auctions.
"Shippers to the Commonwealth of Independent States continued to be reasonably active although at lower levels which is possibly reflective of the limited buying power due to the significant depreciation of the Russian rouble in the recent past," they said.
The rouble has slumped nearly 30% against the dollar this year as falling oil prices and Western sanctions over the Ukraine crisis reduced Russia’s exports and investment inflows.
Interest from UK and Europe was also limited at the Colombo auctions possibly following a decline in quality, while there was fair demand from Japan.
The US dollar has strengthened this year, causing prices of commodities priced in that currency to fall, as the Federal Reserve withdraws its money printing or economic stimulus programme and is seen heading for an interest hike.