Week 36, 2015
Tea market report 30 August–4 September, 2015
The global supply situation is looking a bit better at the moment and those who believe that El Nino might support crop in East Africa in 2015/2016 certainly will not be big bulls. Kenya published an all-time high July crop figure which reduces the gap to 20m.kgs YTD. July is traditionally a low cropping month although it might be an indicator that the remaining months of 2015 will also help to close the gap with last year. The Kenyan market wobbled a bit this week. Most teas eased but EoR KTDA categories bounced back after heavy losses last week. Malawi had an auction, but quantities are so low and restricted to a couple of producers, it is hard to call a market. Still, decent teas sold firm to dearer whilst poorer sorts are neglected until the current owners are willing to let these go at discount levels. Demand in India is following the drop in quality and prices drift gradually easier. South India CTC sold firm but the bandwidth in which prices move is limited. The situation in Colombo is still dire. Some main markets like Iran and Turkey struggle greatly, but the situation in Syria, Russia, Iraq, etc, is only marginally better. The result is a complete lack in confidence and prices that keep slipping, with the exception of quality UVA’s which receive good seasonal demand. Lastly, we mention Jakarta where auction quantities have dropped with almost 50% due to a prolonged dry season and more private selling. Most grades gained significantly and as long as supply is this restricted we see little down side.
Back to El Nino and its potential effects on global crop and, equally important, on buyer’s behaviour. Back in 97/98 it contributed to extreme weather patterns around the world and Bln’s of dollars of damages in crops, etc. Discussions whether or not we’ll have a proper El Nino now are ongoing, but we should keep in mind that effects are hard to predict and we know the climate has changed a lot in the last 18 years. Still, it seems fair to say we’ll see more extremes in weather patterns around the globe with or without a fully materialized El Nino. At the time it caused wet conditions in East Africa, Argentina and the opposite in i.e. Indonesia, Australia during the fall and winter period. Indonesia is already dry at the moment and it would be dramatic if that situation worsens in coming months. The Argentinean winter has been rather warm and rainy. August was dry with little rainfall and high temperatures. Currently the temperatures have dropped to normal levels but rain is needed to start a normal season. If that happens production can start around week 41/42 and as said; El Nino would boost crop further. Crop in East Africa is currently picking up and if El Nino has its way, we’ll see no shortage of tea in the coming months.
“There is nothing wrong in change, if it is in the right direction. To improve is to change, so to be perfect is to have changed often.” – Sir Winston Churchill
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