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Monday April 22nd, 2024

Sri Lanka’s Ceylon Tea prices extend losses

ECONOMYNEXT – Sri Lanka’s tea prices fell across elevations with prices down 50 to 100 rupees a kilogram with November second week sale, extending falls from a week earlier.

November first week sales with low grown teas slipped 167 rupees per kilogram to 1,408.85 rupees a kilogram, from the previous week, Ceylon Tea Brokers data showed.

In the second week of November, low grown averaged at 3.88 dollars a kilogram down from 4.17 a week earlier.

Global prices also go up in dollar terms (commodity booms) when the US Federal Reserve prints money. However the Federal Reserve has now started to raise rates which tends to bring commodity prices down. Coffee prices fell earlier.

In the November 5th auction, the Low Grown leafy/Tippy variety had seen a drop in demand selling only 2.2 million kilograms.

The Ceylon Tea Brokers auction statement shows that tea prices across all elevations have fallen between 50 to 100 rupees.

Low Grown attract the highest prices for Ceylon Tea.

In the November 2nd week auction, the Low Grown Tea sale average was 1,408.85 rupees, down from 1,516.83 rupees in the previous week.

In dollar terms, it had slipped to 3.88 dollars per kilogram, from 4.17 dollars in the previous week.

Select best BOP1s declined, whilst best and below best were irregularly lower. Poorer types maintained.

OP1 Select best together with best and below best declined. Poorer sorts were fully firm.

PEKOE/PEKOE1’s Select best teas together with full range of bold PEKs were fully firm. Cleaner below best and the rest were irregular.

FBOP/FBOP1’s Except for a few select best invoices all others had a lower market.

BOP’s few well-made invoices held firm whilst all others were lower.

FBOPF/FBOPF1’s Select best and best shed in value, whilst the below best and bottom had a sharp
decline.

High Grown

The High Grown auction average was 1,366.32, down from 1,429.77 rupees.

BOP’s Best Westerns few select invoices were firm whilst others declined by Rs.50/- per kg.

Teas at the below best shed by Rs. 40-80/- per kg.

Plainer teas were firm to easier by Rs. 50/- per kg. Nuwara Eliya’s were irregular and mostly easier.

Uda Pussellawa’s were lower by Rs. 100/- per kg whilst Uva’s lost by Rs. 50/- per kg.

BOPF’s Best Westerns few select invoices were firm whilst others easier by Rs.50/- per kg.

Below best and plainer teas declined by Rs. 50-100/- per kg.

Nuwara Eliya’s had hardly any offerings. Uda Pussellawa’s
shed by Rs. 50/- per kg whilst Uva’s were lower by Rs. 50-100/- per kg.

Medium Grown

The Medium Grown auction average for the week was 1,366.32 rupees down from 1,429.77 rupees a week before.

Last week, BOPF’s Cleaner types maintained whilst all others declined by 50 rupees per kg

In BOP1, Select best and best declined by Rs.50/- per kg, whilst all others were firm.

While Select best easier by Rs.100/- per kg. Best lower by Rs.50/- per kg whilst all others maintained.

OP/OPA’s Select best lower by Rs.100/- per kg. Best and the Below best shed by Rs.50/- per kg whilst the teas at
the lower end maintained.

In the PEKOE/PEKOE1 – PEK Select best declined by Rs. 50/- per kg whilst all others were firm.

PEK1 in general, firm.

FBOP’s Select best and best declined by Rs.100/- per kg whilst all others shed by Rs. 50/- per kg.

FBOPF1’s Select best were lower by Rs.50/- per kg whilst best declined by Rs.100/- per kg.

Below best eased by Rs.50/- per kg. Teas at the poorer sorts were firm.

CTC

High-grown BP1s had hardly any offerings while PF1 eased by Rs. 50-100/- per kg.

Mid-grown BP1s were irregular and PF1 declined by Rs.100 per kg.

Low-grown BPIs hardly any offering and PF1 declined Rs.100-200 per kg.
(Colombo/Nov12/2022)

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IMF official: Sri Lanka’s road ahead is challenging, critical to keep up with reform momentum

ECONOMYNEXT –International Monetary Fund’s First Deputy Managing Director Gita Gopinath said Sri Lanka’s future with many reforms are challenging, but it is critical to keep up with the reform momentum.

Gopinath stated this after meeting the island nation’s State Finance Minister Shehan Semasinghe Central Bank Governor Nandalal Weerasinghe, and Treasury Secretary Mahinda Siriwardena on the sideline of the IMF/World Bank Spring Meetings in Washington.

“I commended them on hard-won economic gains in the past year. The road ahead is challenging and it’s critical to keep up with the reform momentum,” Gopinath wrote on her X platform.

Under IMF programme, President Ranil Wickremesinghe has implemented a raft of hard reforms including higher taxes.

Sri Lanka agreed to the IMF programme after it declared bankruptcy with sovereign debt default in April 2022.

Semasinghe after the meeting tanks Gopinath for acknowledging Sri Lanka’s economic progress.

“Our discussion was insightful and productive, and we appreciate the opportunity to delve into the challenges and opportunities ahead,” the State Finance minister said in his X platform.

“We remain steadfast in our commitment to our reform agenda and eagerly anticipate continued collaboration with the IMF to advance our shared goals.”

Sri Lanka was compelled to go for IMF after the unprecedented economic crisis which was followed by a political crisis that ousted former president Gotabaya Rajapaksa and his government who were legitimately elected.

The IMF programme has included reforms in state-owned enterprises, fiscal sector and financial sectors to ensure debt sustainability.

The global lender also has pledged its support to speed up the island nation’s lingering debt restructuring process with private creditors including sovereign bond holders. (Colombo/April 22/2021)

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Sri Lanka motor racing crash claims 7 lives, 4 critical

ECONOMYNEXT – A deadly accident at motor Race Sri Lanka’s hill country town of Diyathalawa has claimed at least 7 lives police said, after a racing vehicle, in the seasonal Fox Hill Super Cross ploughed in to spectators after running off the track.

Another 21 spectators were injured Sunday, and hospitalized and at least four were critical, police said.

Thousands of people come to watch the Fox Hill Super Cross race, which is usually held in April, as large numbers of people head to the cooler climes in the hills.

According to footage taken by spectators one car overturned on the side of the track.

Sri Lanka’s Newsfirst television said Marshalls were waving flags to caution other vehicles, when another car went off the track and crashed into spectators. (Colombo/April21/2024)

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Widespread support for Sri Lanka debt workout, reform progress at IMF/WB meet: Minister

ECONOMYNEXT – There was widespread support for Sri Lanka’s debt restructuring and acknowledgement of progress made under an International Monetary Fund program, at meeting of the fund and World Bank, State Minister for Finance Shehan Semasinghe said.

“The strides made in our economic recovery and financial stability have been acknowledged as significant advancements towards our country’s prosperity by our stakeholders and international partners,” Minister Semasinghe said in an x.com (twitter) post after attending the meetings.

“Further, it was heartening to note the widespread appreciation and support for Sri Lanka’s debt restructuring process.

“We remain steadfast in our commitment to reaching the restructuring targets and confident of smooth progress in the continued good-faith engagements for a speedy debt resolution that will ensure debt sustainability and comparability of debt treatment.”

Sri Lanka ended a first round of talks with sovereign bondholders in March without striking a deal but some agreement on the basis for a deal.

An initial deal with bilateral creditors have been reached, but they may be awaiting a deal with private creditors to sign formal agreements.

International partners have appreciated reforms made under President Ranil Wickremesinghe, Minister Semasinghe said.

“It was great to engage in productive bilateral discussions with all of whom appreciated the recent economic developments, progress in debt restructuring, strengthening of tax administration, and ongoing governance reforms,” he said.

Sri Lanka’s rupee has been allowed to re-appreciate by the central bank amid deflationary monetary policy, bringing tangible benefits to people in the form of lower energy and food prices, unlike in past IMF programs.

Electricity prices were cut as a strengthening currency helped reduce the cost of coal imports.

Related Sri Lanka central bank mainly responsible for electricity price cut

The currency appreciation has also allowed losses to the Employment Provident Fund imposed to be partially recouped, helping old workers near retirement, as well as raising disposable incomes of current wage earners on fixed salaries.

Related Sri Lanka EPF gets US$1.85bn in value back as central bank strengthens rupee

The IMF, which was set up after World War II to end devaluations seen in the 1930s after the Fed’s policy rate infected other key central banks, started to actively encourage depreciation after a change to its founding articles in 1978 (the Second Amendment).

The usefulness of money as a store of value, or a denominator of current and future values then decline, leading to loss of real savings, real wages and increases in social unrest.

Before that, members who devalued more than 10 percent after printing money for growth or any other reason, faced the threat of suspension from the organization as punishment.

Sri Lanka’s rupee has appreciated to around 300 to the US dollar now from 370 after a surrender rule was lifted in March 2023.

But there is no transparency on the basis that economic bureaucrats are allowing the currency to gain against the US dollar (the intervention currency of the central bank).

The rupee is currently under pressure, despite broadly prudent monetary policy, due to an ‘oversold position’ in the market after recent appreciation made importers and banks to run negative open positions as the usefulness of the currency as a denominator of future value declined with sudden strenghtening. (Colombo/Apr21/2024)

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