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Commodities

Increase in tea supply slashes price at Mombasa auction to new lows



The Mombasa tea auction. FILE PHOTO | NMG
The Mombasa tea auction. FILE PHOTO | NMG 

Tea prices at the Mombasa auction slid to a six-month low last week, to record the worst performance since the beginning of the year.

A market report by the East African Tea Traders Association (Eatta) showed a kilo of the beverage traded at Sh202 from average Sh206 in the previous sale.

Depressed prices saw 14 percent of the tea offered for sale withdrawn from the market, marking one of the highest quantities to have been taken off the trading floor at the auction in the last three months.

The lobby group said 1.9 million kilogrammes of tea were withdrawn from the market by sellers in anticipation of high prices in the future.

Last week’s trading recorded a decrease in volume to settle at 10.8 million kilogrammes from 11.4 million kilogrammes in the previous sale.

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Kenya Tea Development Agency (KTDA), which manages smallholders produce, has warned that growers are staring at low earnings this year because of poor performance at the auction.

“Prices in the run-up to the end of the 2019/20 financial year will be critical in determining farmers’ earnings in the wake of a subdued performance in the 2018/19 financial year,” said the agency in a statement this month. The decline in prices has been attributed to increased volumes of green leaf from farmers that have shot up by four percent so far.

KTDA farmers delivered 768.9 million kilos of green leaf to factories between July 2019 and January 2020 up from 733.4 million kilos in the previous period.

Small-scale tea earnings dropped 22 percent in the year ended June 2019, marking the lowest returns for growers in the last six years.

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