COLOMBO (EconomyNext) –Sri Lankan tea prices recovered at this week’s Colombo auctions as quality improved and helped by the depreciation of the rupee, lower global production and higher prices at other origins, brokers said.
But auction average prices still remained below the same level in 2013 and have been causing loses for many regional plantations companies.
“This week there was better demand and consequently a firm to dearer trend in prices,” , Forbes & Walker Tea Brokers said, referring to sales from plantation company estates.
They attributed the recovery to a combination of the recent depreciation of the rupee against the US dollar, lower global crops and the significant appreciation in prices at the Mombasa auction over the past several weeks.
Global tea production so far this year is about 50 million kilos less than in the same period in 2014.
“However, the overall Colombo auction average is still below the corresponding average in 2013,” Forbes & Walker Tea Brokers said in a report.
“From a global perspective, the current auction prices would appear good value and considering the improvement in product quality that is observed in the forthcoming sales, it would be reasonable to anticipate a gradual upward movement in prices from now on.”
Sri Lankan tea prices have fallen sharply because of problems in key markets like Russia and the Middle East with the devaluation of the rouble and lower oil prices.
John Keells tea brokers said the recovery in oil prices “should auger well for the tea drinking nations in the Middle East, Iran and Iraq.”
They said Iranian and Russian buyers were quite active this week while Iraq, Libya, Jordon, Saudi Arabia and Syria also “lent useful support.”