Commodities

Tea prices drop marginally as global supplies increase  

pickers

Women pick tea leaves at a farm. FILE PHOTO | NMG

geraldandae

Summary

  • Tea prices at the Mombasa auction declined marginally during last week’s sale, interrupting a rally from the previous trading after seven weeks of subdued earnings.
  • Data by the East Africa Tea Traders Association (Eatta), which runs the auction shows that the price of the commodity declined to Sh198 last week from Sh200 in the previous sale.

Tea prices at the Mombasa auction declined marginally during last week’s sale, interrupting a rally from the previous trading after seven weeks of subdued earnings.

Data by the East Africa Tea Traders Association (Eatta), which runs the auction shows that the price of the commodity declined to Sh198 last week from Sh200 in the previous sale.

The low price saw traders withdraw 15 per cent of the total teas that had been offered for sale. The withdrawn tea is re-offered in the next sale.

Volumes offered for trading during the sale declined for the second time in a row, though marginally by 97,000 kilogrammes.

The price of the commodity at the auction had touched a $2- mark in March for the first time in 18 weeks before it started tumbling again in the subsequent sales.

The lower prices have also been attributed to increase in volumes in the world market. Kenya is a leading exporter of the commodity with over 95 per cent of the total tea produced locally shipped outside the country.

Tea exports to Kenya’s major markets increased 19 percent in February compared with the same period last year.

Industry performance report from the Tea Directorate shows the volume of tea exported increased to 48 million kilos in review period from 40 million kilos in the same month last year.

According to the sector regulator, low demand of the beverage has also 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 devaluation of some foreign currencies against the US dollar,” said the Tea Directorate.

The directorate said the huge amount of stocks and high production continue to exert pressure on prices but expects the amount of tea coming from factories to ease up this year.