Week 21, 2016
Tea market report 23-27 May, 2016
On Friday the 20th at close of business an enormous Kenya March 2016 crop figure dropped in our mailboxes. What surprised even more was the reaction of the market, which was like it never happened. Most grades traded firm to dearer. The weather conditions are still favourable although a bit higher temperatures could stimulate the crop further. Three firm auctions in a row combined with a more than healthy supply should bring some easiness on the short term, especially taken into account the unusually high auction quantity for week 24. But we should not forget that it seems that demand is perfectly capable to absorb most of the produced teas.
In Malawi the season is coming to an end, some chiperoni showers stimulate green leaf intake but soon the weather will turn cool and dry. Auction quantities are dropping but this is not unusual for the time of the year. This makes the downwards potential very small and with the declining supply some firmness on the longer term could be expected.
In Sri Lanka the water has receded and people start to pick up their lives again. Some tea companies are affected by the floods and are struggling to start up again. Workers who fled out of their homes gradually coming back. This week’s published crop figure is lower than last year’s due to the drought in March.
The sale in Jakarta met excellent demand with an absorption rate of 100%. Most teas traded firm to dearer. The weather conditions are still favourable in Java as well as Sumatra.
In Vietnam the weather conditions are favourable as well. It is raining in the north and the south, which makes the south slowly recover from the drought. Green leaf prices are still firm but should correct as soon as availability of tea improves. The markets in the north of India met good demand for the better invoices. Weather conditions are favourable with pre monsoon showers proceeding. In the south of India the market traded steady after a few weeks of firmness.
It is questionable if demand at the Mombasa auction will keep momentum and the market continues to move up on the current sentiment. The weather conditions in most other tea growing areas are seasonally normal, which makes production recover in the north of India, the south of Vietnam and Sri Lanka. There is enough tea around for all.
“Making money is art and working is art and good business is the best art.” — Andy Warhol
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