Commodities

Low global demand pulls down tea prices

TEA (4)

Traders during a tea auction in Mombasa in June 2018. FILE PHOTO | NMG

geraldandae

Summary

  • A market report shows a kilogramme of the beverage on average fetched Sh204 ($1.89 down from Sh209 ($1.94) last week.
  • This is the second time in the last three sales that the price of the commodity has been declining after a near three-month rally, signalling a decline in demand in the world market.
  • This week’s volumes increased to 5.7 million kilos from 5.4 million kilos previously after a series of declining supplies in the previous sales.

Tea prices at the Mombasa auction have fallen below two dollars per kilogramme on average as demand remains low on the world market amid growth in volumes at the auction during Tuesday’s trading.

A market report shows a kilogramme of the beverage on average fetched Sh204 ($1.89 down from Sh209 ($1.94) last week.

This is the second time in the last three sales that the price of the commodity has been declining after a near three-month rally, signalling a decline in demand in the world market.

This week’s volumes increased to 5.7 million kilos from 5.4 million kilos previously after a series of declining supplies in the previous sales.

The volumes have been declining in the last six sales occasioned by low volumes coming in from the farms.

Kenya Tea Development Agency (KTDA) said the decline in price was caused by liquidity challenge and constant supply in volumes.

“There are still liquidity challenges in key markets and volumes have plateaued or gone up slightly,” said John Bett, KTDA General Manager for marketing.

KTDA and Rwandan tea traded at above two dollars at the auction in this week’s sale but shed some value when compared with the previous trading.

KTDA tea fetched Sh246 from Sh255 in the last week’s auction with the Rwandan one trading at Sh268 from Sh281 initially.

Demand for tea in the world market has remained depressed because of Covid-19 disruption, which has interfered with the movement of the commodity.

Tea exports to Kenya’s major markets dropped by 3.4 million kilos in seven months to July compared with the same period last year.

Data reports from the tea directorate indicate that the volumes exported dropped to 289.1 million kilogrammes in the review period from 292.6 million in corresponding time last year.