Week 3, 2017
Tea market report 16-20 January 2017
This week’s Mombasa market was very similar to what we regularly see in Colombo. With the continuous stream of messages of dry conditions in the East African tea growing areas and a low closing for week 5, the market traded dearer significantly. All tea growing areas in East Africa have received less rains in the past week and crop intake is declining. Which means that the rain period started late and doesn’t persist as many had hoped. The closing for week 6 is again relatively low. With prices going through the roof it is questionable if all buyers can continue to afford these high prices. The current average auction prices are the highest in 63 sales. In Malawi, there finally was a decent volume on offer. Despite the size, demand was firm and made most teas trade firm to dearer. Probably the brokers were inspired by the direction of the Mombasa auction. The weather conditions are still favourable and the green leaf intake is in full swing. The supply of electricity is improving, which gives factories the possibility to run at full capacity. Again, a dearer market in Colombo, the auction quantities are back at levels above 7 m kgs but most buyers probably focus on the weeks to come. Because the weather conditions are bright and very dry. Some tea estates already report a declining production. Despite unfavourable economic & political circumstances in Ceylon tea drinking countries, demand remains firm and it isn’t expected to change soon. In Jakarta, most teas traded firm to dearer with some Java orthodox teas trading irregular. The low percentage of outlots of only 2.7% reflected the firm demand for the teas on offer. The weather conditions remain favourable for growing tea, which keeps tea production healthy.
The north of India is currently in the off season, most teas on offer traded steady to easier. This week the November crop figure came out and showed us the 4th monthly record crop in 2016. This mainly due to the north. The south of India is experiencing wintery weather conditions with low temperatures and little rainfall.
Most Vietnamese tea growers are preparing for TET holiday and the Chinese for New Year. Pruning is done and factories are mostly closed for maintenance. There are still some teas available in warehouses but general availability of tea is very limited.
All eyes are at Mombasa, is this firm trend going to continue? Are buyers able to afford these price levels? In a few weeks’ time we’ll know. What we do know is that many consumers expect a cuppa of some sort and that tea is still one of the cheapest drinks available.
“How many legs does a dog have, if you call the tail a leg? Four. Calling a tail, a leg doesn’t make it a leg.” – Abraham Lincoln
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