Tea prices hit a two-year high after rising 6.3pc in last week’s auction

The price of tea has hit a two-year high with an increase of 6.3 per cent in the last auction with industry players forecasting more gains.

The price of the beverage at the Mombasa auction hit a high of Sh286 per kilogramme last Tuesday, up from Sh268 the previous week.

Edward Mudibo, the managing director of East African Tea Traders Association (EATTA), said the price is expected to maintain the trend in coming weeks.

“This week’s price represents a two-year high and we expect to witness better prices at the auction in subsequent sales,” said Mr Mudibo.

He noted that the drought will be a key factor in determining price as low volumes will raise demand and cost. However, he said, the price realised this week was not a result of the low volumes given that the quantity of tea offered for sale was higher than the previous week.

READ: Tea prices start New Year on a high at Mombasa auction

EATTA projects that the price might reach Sh300 per kilo, though it is expected to stabilise around the current figure.

According to Kenya Tea Development Agency (KTDA) production of the beverage in the country has decreased by 30 per cent in the last five months due to the prolonged dry spell. KTDA chairman Peter Kanyago said that although tea prices improved at the auction, farm production has fallen.

The impressive performance gives farmers hope of earning a good bonus at the end of the financial year, if the same trend continues in although low volumes should temper expectations. 

The weatherman says drought might last up to April.