Sellers withhold Sh590m tea as price hits 4-year low

About three million kilos of tea was pulled out of the auction last week as prices dipped further, forcing sellers to withhold their commodity.

By the Sh196 average price per kilo at the auction, the tea could have fetched Sh588 million but was never sold.

According to East African Tea Traders Association (Eatta), the volume offered for sale last week was 11.7 million kilos and only 8.5 million were sold.

The Mombasa auction has been witnessing a streak of low prices since the beginning of the year in what has been attributed to high tea volumes.

“Out of 166,295 packages (11,750,000 kilos) available for sale, 130,679 packages (8,515,428 kilos) were sold. About 21.41 percent of the packages remained unsold,” said Eatta.

The volumes offered for sale declined last week from 8.9 million kilos to 7.6 million, to mark the seventh time that the quantity has come down. However, this has not helped to lift the prices.

Buyers had last month projected that the price was poised to rise in the coming sales as a result of dry weather, 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.

The Tea Directorate has forecast that volumes will this year drop to 416 million kilos from a high of 474 million kilos last year.

The decline, said the directorate, will see the average auction price surge to Sh280 a kilo up from Sh260 achieved in 2018.

The Mombasa auction has been receiving a lot of tea from factories following high production of green leaf on firms resulting from good weather last year.

Due to the supply, the price of the beverage at the auction has hit a four-and-a-half-year low in the latest sale held last week.

The low prices has led to congestion at warehouses in Mombasa due to decreased demand as most sellers withhold their commodity.