Tea prices at the Mombasa auction fell to a five-year low in the latest weekly sale as the value of the commodity continues to deteriorate leading to a record withdrawal of product during trading.
A market report from the East African Tea Traders Association (Eatta) indicates the price of the beverage declined to Sh181 last week, down from Sh187 that was realised in the previous sale.
The lower price saw 20 percent of the tea that had been offered for sale withdrawn from the auction floor as traders chose to wait and see if the prices will improve in the next trading session.
The price of the beverage has been declining for nearly a month now, pointing to lower earnings for farmers in the current financial year, which ends this month.
“Out of 13 million kilos available for sale, 10.3 million were sold while 20 percent remained unsold,” said the EATTA.
The decline in price comes despite the volumes offered for sale dropping by 99,499 kilogrammes from the previous sale.
The low prices saw 2.7 million kilogrammes taken off the trading floor and will be re-offered in the next auction.
The price of tea has been fluctuating at the auction even as the volumes offered for trading has been constantly declining in the last five sales.
According to the sector regulator, low demand of the beverage has been a contributing factor to depressed earnings.
“Demand has also been affected to some extent by reduced consumer purchasing power due to the effect of the global economic recession that is perpetuated by the Covid-19 pandemic as well as the devaluation of some foreign currencies against the US dollar,” said the Tea Directorate.
The prices have largely remained below one dollar and only touched a two dollar mark during sale 10 that was held in March this year.