Week 47, 2014
Tea market report 17–21 November, 2014
The year is slowly drawing to a close and it becomes clearer by the week that 2014 will be another record year. YTD global (excl. China) crop till October is 12mln kg ahead of last year. This doesn’t sound as much but keep in mind that last year was already massive on the year before that. And with another 3 months to be included the signs are on green for an increase roughly between 20 – 40mln kg. Difficult to get bullish with these numbers, especially considering that demand at the end of the year is often erratic due to breaks and holidays.
Kenya was therefore, quite surprising this week, with improved demand and absorption rates. Prices gained moderately but this market is showing quite a bit of resilience. Malawi had another poor session with only fresh invoices selling around prevailing rates. Colombo wobbled and demand slackened due to persisting Rubble problems in Russia and political turmoil in the Middle East. High Growns were quite firm but LG teas were all over the place. North India saw demand pick up and both CTC and orthodox sold dearer. South India slipped further and prices start to look attractive. Indonesia drifted further south as well, due to payment issues and general lack of demand.
Global weather patterns remain beneficial for the production of green leaf. East Africa received more rain, especially EoR. Malawi is still dry but all signs point to a normal start of the season in the next couple of weeks. In Asia the season in China and Vietnam draw to a close, whilst India, Sri Lanka and India will continue to produce. Argentina just finished its first plucking cycle and the 2nd (better quality) round is underway.
Supply is still ahead of demand and we remain mildly bearish for the rest of 2014. For 2015, it’s rather early to give firm predictions but it’s clear there will be no shortage of tea.
This one we’ll put into practice:
"Always borrow money from a pessimist. He won’t expect it back.”