Low rainfall to keep tea prices at Mombasa auction high
Kenya, the world’s biggest exporter of black tea, earned Sh62 billion from an output of 345 million kg in 2008.
Tea prices at the Mombasa auction are expected to remain high as growers in the region continue to record a drop in production because of low rainfall.
A market report by the African Tea Brokers Limited showed that supplies from countries that trade their supplies at the weekly auction — including Kenya, Uganda, Rwanda and Malawi — remained on a slump.
“East of the Rift Valley recorded dry conditions. Apart from scattered showers in Kirinyaga and Embu, temperatures averaged 21°C. The crop continues to decline but shows a slight increase in Nandi,” the report said.
As an indication of the pressure on supplies, the auction only received 4.6million kg of main grade tea for trading this week, down from 5.3million kg handled last week.
The volumes are projected to further slump to 4.2million kg next week. Kenya’s tea exports are facing slowed demand from its traditional bulk buyers who are cutting orders due to the resultant sharp rise in prices.
Surge in price Statistics released last month by the Tea Board of Kenya (TBK) show that export volumes in May stood at 22.4 million kg — 22 per cent lower compared to the 28.7 million kg pushed through to foreign markets during the same period last year.
The auction recorded 24.7 million kg in exports in April. The surge in price is attributed to the drop in tea production due to poor rainfall in key tea growing zones.
The weatherman’s warning that the country will face below normal rainfall in the three months to August is a pointer that the drop in supplies at the auction is expected to hold.
A similar situation is being experienced in other regional states that supply the auction, with traders warning that the high prices are likely to hold on for a while. Kenya, the world’s biggest exporter of black tea, earned Sh62 billion from an output of 345 million kg in 2008.
This year, however, experts expect a 10 per cent drop in volumes. The effect of dry weather conditions was more severe in the east of the Rift Valley where production fell by 19 per cent.
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