Colombo tea prices spiral as Covid-19 lockdowns depress global producers

by Steve A. Morrell

Brokers agreed in their weekly market reports that tea production at 21.9 million kilos for September 2020 was more or less on par with the corresponding month of the previous year (2019).

However, performance year-on-year indicated dismal results with Asia Siyaka Tea Brokers saying comparative results in cumulative perspective reflected a minus variance deficit of 31.8 million kilos.

Production at the end of 2019 was 300.1 million kilos. The deficit performance by end September 2019, cumulatively at 201.1 million kilos, was an indicator that the minus variance would continue with production remaining at that level. Production at end September 2019 was 232.9 million kilos.

Attributed to the production deficit results was the severe drought in the first quarter of 2020, which retarded growth. The drought cut across all elevations, but particularly impacted on low growns, which set back production.

However, prices remained at competitive levels. Cumulatively, up to October 14, 2020, the net sales average (NSA) was Rs. 645.03 per kilo. The 2019 average over the same period was Rs. 513.47 per kilo.

The price table of John Keells Tea Market Report showed a steady increase in prices over the months in 2020. Low growns recorded the highest levels at Rs. 674.25 per kilo thereby contributing substantially to the upward trend in the price table.

The report also said flowery grades prices were high. For low growns, FBOPF recorded Rs. 2,800 per kilo while Op 1 fetched Rs. 3,100. per kilo.

The reasons attributed for the price increases in Colombo were shortages in producing countries in the backdrop of global corona lockdowns. India was singled out for its traumatic market conditions because of the pandemic sweeping the world.

The Uva quality season made a difference in Colombo. Though this year, the season was short-lived, it did contribute its share to the price table.

The Forbes & Walker Tea Market report said CTC (Cut Twist Curl) production at end September 2020 recorded marginal decrease of 0.1 million kilos. However, prices at Rs. 569.95 per kilo were better than the Rs. 420.25 fetched in 2019.

Although, the Covid-19 resulted in a global economic crisis, tea production continued to sustain economic activity in Sri Lanka without interruption. Tea was produced, sales and auctions were carried out and the produce was shipped out as routine.

Brokers attributed the sustained forward movement of the industry to the plantations and the tea smallholders, who continued normal production.