Tea prices ‘good’ in 2020 with low growns as biggest contributor to high average

By Steve A. Morrell

The cumulative average of Rs. 628.21 (US$ 3.42) was the highest average recorded on all teas sold last year, the Forbes and Walker tea market report reported.

With steady increases in net sales averages throughout 2020, culminated in prices realized at the end of the year.

The industry described prices during the year as “good”. However, interestingly, although low growns were the highest contributor to the high average, high and mid growns also recorded substantial averages described as the highest on record. Low growns averaged Rs. 666/32 per kilo.

Brokers attributed the high prices to less tea available all year round with the exception of Kenya, which recorded distinctly positive crop returns.

India’s tea production was badly hit by the Covid-19 just as much as many other South East Asian countries. The disruption in the demand and supply mechanism influenced price increases in Colombo, they said.

The Sri Lanka Tea Board also contributed in positive terms to the high prices though active promotional campaigns. The crop position, 2020 year end, as reported by Asia Siyaka Tea Market Report, was 262.6 million kilos. Comparatively, 2019 recorded 284.3 million kilos, indicating a drop in both production years.

The reasons attributed were extreme dry weather in the first quarter 2020 affected crop intakes. The weather factored cropping patterns and irrespective of some mid-year respite recouping the shortfall could not be realized to ensure crop resurgence.

Irrespective of high prices realized, apart from five Regional Plantation Companies (RPCs) which returned year end profits, there was no positive news from other RPCs.

The smallholder sector continued to record their positive trend contributing some 75 percent to the overall production result. The crop variance year-on-year was 83.6 million kilos.

Commenting on crop intakes that affected the global supply, the Asia Siyaka report further said Kenya’s increased production was 104 million kilos while India’s minus result was 142 million kilos.

A source from the Tea Factory Owners’ Association, who declined identification, said the tea factory sector also contributed to high prices by strictly maintaining manufacturing standards.

John Keells Tea Market report said the demand from Turkey, Iran, Russia, and CIS countries lent fair support. Libya and Iraq too were active in Colombo.

The report further said flowery grades were sold at prices in the range of Rs. 2,800. per kilo.