Ceylon Tea is considered as one of the finest tasting teas in the world and has been appreciated for it’s well balanced character by tea masters all over the world. But currently, Ceylon tea market is at a stressful position due to many local and global issues. Below is a briefing on the latest Ceylon Tea market position by Steve A. Morrell.

Amidst the political turmoil, prices of tea, one of Sri Lanka’s major exports, dipped in comparison to the previous week’s trading in Colombo. The resignation of the Tea Board Chairman following the ministerial change further clouded the industry. Tea Board sources, who preferred anonymity, declined comment of our request for information on the industry and its immediate future.

Most decisions were on hold. The Tea Board meeting scheduled for October 31 didn’t go ahead. Apart from routine functions there was no decisive action from the Tea Board.

Brokers confirmed that prices were falling, but said they are not in a position to comment on political developments.

However, the tea market report from John Keells PLC, indicated that crop intakes from high, medium and low grown elevations were rising, with expectations that after the Deepavali holidays, there would be a rush in crops expected to continue till year end.

“This is normal”, they said.

In addition with ‘growing weather’ experienced in most planting districts, the crop position could remain stable although the crop deficit in comparison to 2017 would not be overcome.

Irrespective of the US sanctions on Iran, teas purchased from the Colombo auctions faced an additional setback. Buyers from most origins including Russia, CIS countries and other Middle East countries failed to settle their bills.

Brokers explained that bill settlements, in some instances, could take as long as four months, placing financial stress on the tea trade in Colombo.

Compounding an already dull trading position, tea was in a stressful state in the context for trade, prices, and production, they said.

Further, although there were other avenues to export to Iran, such exports also faced bills settlement problems with Iran uncertain on how such bills would be settled.

However, the ban on oil exports from Iran to India being lifted could perhaps help exports to the Middle East.The tea trade was hopeful that a veiled benefit for Sri Lankan tea exports could bolster trading and, more importantly, settlement of bills in the short term.

As for the Japanese MRL (Maximum Residue Levels) problem, brokers say that monitoring of Ceylon Tea was largely on estate level products, but generally the authorities are now looking at Ceylon tea as a whole.

Japan is the major market for high growns. September’s high grown average at Rs. 612/04 per kilo was up Rs. 39/43 YOY. Traders are hopeful that Japanese buyers may have contributed to this improvement and it was more than “just a flash in the pan”.

References

1. Original Post: http://www.island.lk/index.php?page_cat=article-details&page=article-details&code_title=194236