Huge demand for CTC high grown tea

Hiran H.Senewiratne

TEA: The demand for all high grown CTC tea mainly bag type tea will have an excellent overseas market opportunity for Sri Lanka following a massive drought in Kenya, industry sources said.

Kenya was the market leader where the CTC high grown tea bag market is concerned which is exported mainly to Pakistan, Egypt and United Kingdom.

At present there is more than a 40 million kilogramme short fall in the international market due the short supply of CTC tea by them.

Sri Lanka's major tea exporting companies are now planning to exploit the opportunity to penetrate into the lucrative Pakistan market through the Free Trade Agreement and other countries as well, its sources said.

According to tea industry sources, CTC tea prices have gone up by US$ 50 cents in the Mombasa tea auction due to this sensational shortfall of CTC high grown tea in the world market. Senior Vice President - Asia Siyaka Commodities Ltd, Anil Cooke told the Daily News that Sri Lanka is in the middle of the Western quality season.

'During this period prices tend to go up and we could see a sharp increase of BOP demand in the market due to the short supply. He also said that high grown productivity was lower than expected during the latter part of 2005', cooke said.

Cooke also said that Uva or Eastern tea productions were low last year due to the low rainfall in the country affecting Sri Lanka's production.

Given this situation, the industry experienced a 30-40 per cent drop in CTC production in the world market, he said. Cooke said that Kenya's tea crop declined from November. Therefore this shortfall is expected to continue for a couple of months giving tremendous opportunities for the Sri Lanka.

He said that industry is now in the process of capitalising this opportunity to attract markets during June and August. A representative of Standard Trading Buyers Sanjay Herath said that crop shortage of 40 million kilogrammes from Kenya created panic buying. He said that they expected this trend will continue till April this year.

He said that industry is also worried about a drought in tea growing areas, which will affect the local tea industry in the future.

Jafferjee Brothers Representative Niranjan Weerasinghe said that market has moved above the rook, which they got Rs. 35-50 more for a kilogramme. They expect orthodox tea prices also to go up in price in the future, he said.
