Tea price at 6-month high as volumes fall

Tea prices at the Mombasa Auction inched closer to a return to the two-dollar mark as the commodity continues to record good performance in the market weeks after the government introduced a reserve price.

The average price of the beverage rose to a six-month high of $1.97 from $1.95 per kilogramme in the previous sale.

This offered farmers hope that their earnings will rebound going into the last quarter of the year after months of depressed prices.

Last month, the Ministry of Agriculture issued a directive that would require traders to pay a minimum of Sh183 for a kilo of Kenya Tea Development Agency teas at the auction following a sharp decline in prices that the government said was subjecting farmers to losses.

The volume of tea that was withdrawn from the auction floor also went down from 38 percent last week to 33 percent in the latest sale as a result of the higher price.

“There was an irregular demand for the 136,540 packages (8,800,696 kilos) available for sale with 91,540 packages (5,811,451 Kilos) being sold while 32.9 percent of the packages remained unsold due to high reserve price,” said East African Tea Traders Association (Eatta).

The volumes of the beverage at the auction however continued to decline, with this week recording 956,187 kilogrammes less when compared with the previous sale.

The lower volumes have seen the Mombasa Auction cut the trading days to two from three initially.

Eatta has been conducting three auctions a week for some time now after the quantities of tea rose sharply at the weekly trading. Managing director Edward Mudibo said the Wednesday auction would not be held from this week.

The auction has been moving as much as 13 million kilos in a week during the peak of the supply, but this has now fallen significantly, to eight million in this week’s sale.