Traders withdrew teas worth Sh1.2 billion from the latest auction as prices remain low in the market, making it the largest consignment to have been taken off the trading floor this year.
Data from the East African Tea Trade Association (Eatta) indicates that 4.7 million kilogrammes of tea were withdrawn during the sale as the price increased marginally to $2.25 (Sh262) a kilo from $2.24 (Sh260.7) in the previous sale.
The tea that was not sold in this week’s trading represented 34 percent of the total volumes that were offered for sale, up from 29 percent in the previous auction.
“There was a fair demand for the 189,600 packages (13.1 million kilos) for sale with 125,020 packages (8.3 million) kilos being sold,” said Edward Mudibo, managing director at Eatta.
The current price marks the third month that the value of the commodity has been selling below the government set a minimum price that was introduced in June last year.
The Agriculture ministry set $2.45 (Sh279.7) as a minimum price for tea at the auction after the earnings fell below the production cost.
The minimum price applies to tea from Kenya Tea Development Agency, meaning that average selling prices at the auction can fall below the set threshold as other producers bid lower to move their stocks.
The falling prices look set to continue hurting incomes from one of Kenya’s leading foreign exchange sources as the war in Eastern Europe, which has also cut supply to Russia, rages.
Russian traders extended their absence from the market for nearly three months now following the ongoing war between Moscow and Kyiv. Russia has been slapped with sanctions by European countries and the US.
Some sanctions include the exclusion of Moscow from SWIFT –a payment system that allows banks to transact with other financial institutions.
The US has also banned the Central Bank of Russia from trading in dollars, a move that will make it difficult for the country to trade commodities with the world market as most global trade is conducted using the greenback.