Tea rises to highest point this year on State’s reserve price

The value of tea at the Mombasa auction rallied to the highest mark this year on the back of the reserve price set by the government.

The commodity continued on a streak of impressive prices, hitting Sh235 ($2.18) a kilogramme(kg) on average from Sh226 ($2.10) last week.

The price increment defied a growth in volume at the auction, which was 109,325 kilogrammes higher when compared with the previous sale.

A series of good prices witnessed in the recent sales saw the volume of tea withdrawn from the trading floor go up slightly to 24 percent from 23 percent previously as traders anticipate an even better value in the coming auctions.

“There was a good general demand for the 125,919 packages (8.3 kg) available at irregular levels for sale with 95,320 packages (6.2 kg) being sold,” said East African Tea Traders Association (Eatta).

The prices at the auction have been going up for the last two months as the minimum price set by the government continues to have a positive impact on earnings.

The prices are likely to continue on an upward trend in future sales as the sector regulator forecasts that a decline in production will continue in the coming months, cutting down on supplies amid high demand.

Tea production in half-year to June declined by 26 million kilogrammes compared with the corresponding period last year on the back of unfavourable weather.

Tea Directorate said green leaf delivered to factory between January and June was 274 million kg compared with 300 million kg in the same period in 2020.

“Owing to unfavourable weather conditions experienced this year to date, lower production trend is expected to continue throughout the rest of the year,” said the directorate.