Ethiopia plan to boost tea output causes jitters

“Traditionally, this time is quite dry and the rains would not be of much effect, but help improve on the quality of existing leaf. The fundamentals that drove global prices to historic levels haven’t changed much and we expected prices to stay within a steady range,” Mrs Kariuki said.

The historic rally in global prices of tea was caused by droughts in India, Sri Lanka and Kenya against increased demand for the product.

TBK’s price projection seemed in tandem with proceedings at this week’s auction in Mombasa where prices of top grade teas rose substantially compared to the previous week.

For instance, the price of top BP1s climbed to an average of $3.81 per kg from $3.69 per kg registered the previous week.

Brighter PF1s also had a good run at the sale fetching between $3.68 and $3.15 per kg, compared with last week’s $3.42-$3.18 per kg.

“There was good, but irregular demand for the 111,006 packages on offer with some invoices taken out,” Africa Tea Brokers (ATB) said in a market report.

Kenya is banking on improved output and a resilient demand in key international markets to improve its tea export earnings this year as the economies of most nations recover from the effects of the financial downturn.

Only last month, TBK revised upwards its 2010 expected earnings to Sh70 billion from the previous Sh68 billion citing “good market fundamentals” Kenya earned Sh62 billion from tea exports in 2008.

In terms of production, TBK projects output will rise by more than 15 per cent this year, from 315 million kg in 2009 largely due to improved rainfall over most key growing areas especially west of the Rift Valley.