Tea prices at auction rise marginally on declining supply

Tea prices at the Mombasa auction rose marginally in this week’s sale compared with the previous trading even as the volume continued on a downward trend.

A kilogramme of tea traded at Sh284 on average, up from last week’s Sh282. The volume offered for sale during the auction went down by 196,257 kilogrammes, marking the seventh time in a row that the quantity has been dipping.

At Sh284 per kilo, the price is slightly higher when compared with the same period last year when the same quantity traded at Sh283 on average.

“Out of 139,959 packages (9,020,000 kilos) available for sale, 125,939 packages (8,131,487 kilos) were sold with 10.01 per cent of packages remaining unsold,” says a report from East African Tea Traders Association.

The Tea Directorate had anticipated that the volume would start falling this year following dry weather witnessed in December last year which has seen a slight decline in the quantity of green leaf delivered to factories. Last year the directorate said that a drop in volume would firm the price amid high demand of the beverage.

READ: Relief for farmers as tea prices rebound at Mombasa sale

Higher tea prices at the Mombasa auction pushed farmer’s earnings to Sh129 billion last year, defying drought which saw production of green leaf decline.

The earnings were attributed to an increase in the price of made tea and a stable exchange rate against the US dollar.

A kilo of the beverage traded at Sh303 at the auction last year compared with Sh240 in 2016.

Kenya is the leading exporter of black CTC teas in the world, accounting for about 24 per cent of the global exports.

The country exports the bulk of its teas to Egypt, the UK, Pakistan, Afghanistan, Iran, Sudan, Yemen and the UAE. 

The Tea Directorate is scouting for new markets to cut overreliance on traditional ones.