Commodities

Tea prices flat in Mombasa auction after rally of two weeks

tea

A woman plucks tea on a farm in Kiptagich, Kuresoi South in Nakuru County along the Olenguruone- Bomet road in this photo taken on Monday, May 03, 2021. PHOTO | JOHN NJOROGE | NMG

Tea prices at the Mombasa auction remained flat in last week’s sale after rallying in the previous two trading sessions amid fair demand.

A kilogramme of the commodity plateaued at $2.40 (Sh276), which is the same price that it fetched in the previous sale.

This saw the volumes of tea that were not sold drop to 14 percent in the auction, down from 20 percent in the previous sale.

“There was a fairly good demand for the 12.4 million kilos offered for sale while 14.3 percent remained unsold,” said the Tea Brokers East Africa Limited.

During the sale, Egyptian and Pakistan Packers maintained interest with Yemen, other Middle Eastern countries, and Kazakhstan lending good support while those from the UK were more selective.

“There was reduced enquiry from Sudan and Afghanistan with only minimal purchases from Iran. Russia remained absent,” said the brokers.

Demand for tea in the Russian market has been subdued by the ongoing war between Moscow and Ukraine, which is currently in its second month.

Russia, one of the top 10 buyers of the Kenyan teas, has been slapped with sanctions by Europe and the US. Some sanctions include the exclusion of Moscow from SWIFT — a payment system that allows banks to transact with other financial institutions.

Traders are jittery about selling tea to Russia fearing that it will take them long to get payments for supplies made as the business is normally transacted in dollars.

Export earnings from tea grew by Sh16 billion or 13.3 percent last year, helped by higher volumes and a weaker shilling.

The Tea Board of Kenya put the earnings at Sh136 billion last year when compared with the Sh120 billion that was recorded in 2020.

The earnings improved despite the Covid-19 shock that disrupted the export of the beverage to the world market.

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