Week 27, 2015
Tea market report 29 June–3 July, 2015
A general saying describes that markets never go up in a straight line. This week’s Mombasa auction could be the perfect example. If this week’s auction is considered as an interruption of the upwards trend, we should expect the market to go up on the short term. Auction quantities remain above 100.000 packages but still considerably below last year’s. This year’s crop figures are down around 30%, export figures are down only 11% compared to last year. This could indicate that carryover stocks from the peak season aren’t there to cover ongoing demand in the cold season.
The Malawi season is running at its end, for the moment there is still a weekly auction in Malawi but soon this will turn in a biweekly auction due to the declining quantities on offer. The weather in Malawi is cool at the moment, advantage of slow growing tea bushes is the improving quality.
The Colombo auction is suffering under decent amounts of tea on offer and continuous instability in the origins of their traditional buyers. For the moment no improvements are to be expected in the situation in Turkey, Russia, Syria and Libya.
The crop in the middle and north of Vietnam is suffering under drought, temperatures of between 37-39o Celsius are reported, even during the night temperatures hardly go down. Cooler temperatures and rains are expected in two weeks.
Looking at the above picture, it looks more like a bull than a bear. This isn’t the complete picture, in South India there is enough tea and also Sri Lanka has a decent crop so far. El Nino is the magic word in several other commodity markets like soybean oil and coffee. If El Nino will move its tail, it could be that this is in favour of tea production in Argentina later this year. The tea market doesn’t seem to be as black and white as a bull and a bear.
"When everything seems to be going against you, remember that the airplane takes off against the wind, not with it." – Henry Ford
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