Tea auction prices decline

This week’s Colombo tea auctions saw the prices declining across the board except for few select best western BOPs which appreciated sharply following airmail enquiry, according to tea market report. This was amid January sales averaging Rs.423.33, an all-time record surpassing the previous best of Rs.394.29 in January 2011, predominantly due to devalued rupee.

“A few best Western BOPs sold well, whilst others were irregularly lower. However, some below best invoices appreciated Rs.5 to Rs.10, whilst plainer sorts were irregular. Select Best BOPFs were irregular and most often tended lower, whilst the below best types declined Rs.20 to Rs.25 and plainer types too shedding Rs.15 to Rs.20 on average” John Keells PLC (JKH) stated.

Speaking to Mirror Business an official from Ceylon Tea Brokers PLC however said the decline in prices was due to general market conditions and it has no implication from the controversial doubling of cess which was arbitrarily imposed but later put on hold due to stakeholder protest.

“Both Nuwara Eliya BOP/BOPFs tended lower with a little interest. Uva BOPs declined Rs.10 to Rs.15, whilst BOPFs eased Rs.15 to Rs.20 on average. Best Low Grown CTC PF1s maintained, others were firm to a little easier. High and Medium types shed Rs.15 to Rs.20. Low Grown BP1s appreciated substantially, whilst High and Medium types were firm to a little dearer”. The report further added.

Meanwhile JKH said that the sudden announcement to increase the Tea Export Cess did have an impact on the Low Grown Market of last week, particularly on the second day while the Government's decision to implement the increase from March 2013 did bring about some stability to the Tea Market this week.

All industry stakeholders have highly welcomed the subsequent amendment to the new cess levy which would be calculated on a monthly basis (instead of weekly basis) at a rate of 2.5 percent of the Colombo Tea Auction average price or Rs. 10 per kg depending on which is higher while the imposition was also delayed till March 01.

Meanwhile the total quantity up for sale was also down by 0.4 million kilograms to 6.9 million at this week's auctions.

“From the point of view of prices, year 2013 has started on a strong footing with January sales averaging Rs.423.33 which is 21.51 percent over the corresponding month of 2012. The month's average is also an all time record surpassing the previous best of Rs.394.29 in January 2011”, JKH tea market report said.