About 22 percent of the tea at the Mombasa auction went unsold Tuesday as brokers held back the commodity after buyers failed to meet their price expectations.
This came as the price of the commodity slide to settle at a four-year low after briefly rallying in the previous sale—forcing sellers to withdraw two million kilos of tea that was set for auction.
A market report from the auction indicates that a kilogramme of tea fetched Sh205 down from Sh210 that it was sold at last week.
“Out of 197,633 packages (12,080,000 kilos) available for sale, 154,524 packages (10,040,968 kilos) were sold with 21.81 percent of the packages remaining unsold,” said East African Tea Traders Association in the report.
This is the second highest volume of tea to be offloaded from the auction this year after sale six early this month, which saw 24 percent of the commodity not offered for sale.
This comes even as stakeholders at the auction had last week projected the price of the commodity was poised to go up in the coming sales as a result of the ongoing drought, which has cut the supply of green leaf to the factories.
It was expected that panic buying resulting from anticipated shortage was going to push up the price above the current lows.
“There is now panic buying at the auction and this move is going to boost the price at the auction as demand goes up with buyers wanting to stock more tea,” said Global Tea and Commodities director Peter Kimanga last week.
The Tea Directorate has forecast that the volumes of the beverage will this year drop to 416 million kilos from a high of 474 million kilos last year.
The decline, says the directorate, will see the average auction price surge to Sh280 a kilo up from Sh260 achieved in 2018.
The fall in tea prices is likely to compound the forex inflow situation with the poor scenario repeated in the coffee sector.