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Sri Lanka tea prices up again on supply shortfall

25 Sep, 2009 18:24:24

Sept 25, 2009 (LBO) - Prices of Sri Lanka's high grown teas made by plantation firms rose again at the Colombo auctions this week owing to supply shortages, brokers said.

The local crop has been affected by drought earlier this year followed by recent labour union action that disrupted production and transport of made tea from estates owned by listed plantations companies. Supply shortages caused by drought in other origins like Kenya and India are seen keeping tea prices strong, brokers said.

"This week's auction quantities showed a marginal decline," Forbes & Walker Tea Brokers said.

"Another week of good demand, though an element of selectiveness was evident."

They said most other auction centres too have experienced a "buoyant market" with some degree of selectiveness.

There was good demand for high grown teas at the Colombo auctions.

"Prices commenced at a firm to dearer note, although the same tempo was not maintained towards the close. The limited availability of BOP (varieties) continued to meet strong demand and often gained 5-10 rupees a kilo all round.

"Bartleet Produce Marketing said there were signs of a shortfall in volumes at the auctions because of the labour union action to back demands for a wage hike earlier this month.

There was strong buying from the Commonwealth of Independent States, the main market for Sri Lankan tea, ahead of the Russian winter.

Brokers Asia Siyaka Commodities said the largest percentage production drop for August has been from the high grown elevations where the crop is down by almost a quarter compared with a year ago. They said the national production shortfall for the year is 42 million kilos.

Tea industry officials said the global supply shortfall is keeping tea prices high and could propel them higher next year as well because of low stocks in consumer countries.

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Uppdaterad 2009-09-27