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Commodities

Panic buying lifts tea prices to 7-month high at auction

A worker on a tea estate in Kericho. FILE PHOTO | NMG
A worker on a tea estate in Kericho. FILE PHOTO | NMG 

Prices at the Mombasa tea auction hit a seven-month high on Tuesday as traders made panic purchases due to anxiety about the impending October 26 repeat presidential election.

Data from East African Tea Traders Association (EATTA) indicate that a kilogramme of tea was sold at Sh310 on average during this week’s auction, up from last week’s Sh297 — the highest since February.

“The average prices have been good enough and they are reflective of good demand as traders want to have enough stocks,” said Edward Mudibo, EATTA managing director.
Traders said prices of the commodity are expected to stick around Sh300 per kilo for the next one month as the country goes back to the poll.

The Tea Directorate has attributed the rally in price on panic buying as uncertainty over the outcome of the October 26 poll lingers in the business environment.

Mr Mudibo said most individual offers of tea have lately traded above Sh400 per kilo, helping to improve the overall performance of prices at the auction.

Mombasa is a regional hub for tea trade, with the auction selling teas from more than 19 African countries. Each tea attracts a different price based on quality.

About 136,059 packages weighing 8.88 million kilogrammes of tea were available for sale during trading on Tuesday, where 123,320 packages weighing 8.081 million kilogrammes were sold while 9.36 packages remained unsold.

Pakistan Packers were dominant and showed strong support during the auction, with Yemen and other Middle Eastern countries lending strong activity.

Egyptian Packers, Afghanistan, Bazaar and UK showed more interest with Kazakhstan and Russia remaining active during the trade.

Tea exports to Pakistan, Kenya’s largest buyer of the commodity, fell 38 per cent in August compared to the previous month due to jitters about last month’s General Election.

Data by the Tea Directorate showed Pakistani traders only bought 8.07 million kilogrammes of Kenyan tea in August, down from 13.1 million kilogrammes in July when they amassed huge stocks of the commodity due to uncertainty over the polls.

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