DROP

Tea auction prices slide below two-dollar mark

A kilo averaged $1.88 at this week's sale

In Summary

•This is the lowest price so far this year.

•It hit the two-dollar mark in the first week of this month, fetching $2 (Sh219.60) for the first time since August last year, when it averaged $2.04 (Sh223.99).

Sacks of tea for export at one of the warehouses in Shimanzi, Mombasa. Kenya is one of the leading exporters of Tea/FILE
TEA PRICES Sacks of tea for export at one of the warehouses in Shimanzi, Mombasa. Kenya is one of the leading exporters of Tea/FILE

Average tea prices at the weekly Mombasa auction slid this week to fetch the lowest price so far this year.

The commodity, on average, fetched $1.88 (Sh206.42 ) a kilo down from $1.90 (Sh208.62) it traded at last week, data by the East African Tea Trade Association (EATTA) shows.

The price drop came with a reduction in the total volume traded which was 94,974 kilos less compared to last week , at 10,539,253 (10.5 million kilos), down from 10,634,227 (10.6 million kilos).

Out of 193,455 packages (12,742,027.50 kilogrammes) available for sale, 160,241 packages (10,539,253 kilos) were sold. 15.34 per cent packages remained unsold.

According to EATTA, there was strong inquiry from Egyptian Packers with more interest from Russia while Kazakhstan and other CIS states were active.

"Pakistan Packers, Sudan, Yemen and other Middle Eastern countries were active but at lower levels with Bazaar active but selective,"EATTA managing director Edward Mudibo notes.

UK showed less support with selective activity from Afghanistan with Iran out-priced.

Local Packers showed good interest on account of price. Somalia were active at the lower end of the market.

The key export commodity opened the year with an average price of $1.94 (Sh213.01 ), as market trends showed recovery signs from last year where the Covid-19 pandemic affected the global export markets.

It hit the two-dollar mark in the first week of this month, fetching $2 (Sh219.60) for the first time since August last year, when it averaged $2.04 (Sh223.99).

Anything below two dollars is considered not good.

Prices have averaged $1.90 (Sh208.62) since January.

Last year's similar sale to this week fetched an average $1.87 (Sh205.33), a time when the  Covid-19 pandemic had hit the country.

 Average tea auction prices during the year (2020) shed some six per cent compared to the previous year, as high production and a depressed market occasioned by the pandemic affected demand.

2020's full-year average price was $1.80 (Sh197.28 ), which was lower compared to 2019, when it fetched an average $2.05 (Sh225.09)  at the Mombasa weekly auction.

 Oversupply of tea at the auction affected prices in the second half of last year, according to the Kenya Tea Development Agency.

This is despite a slight drop on the volume of green leaf produced by smallholder tea farmers under KTDA management during the six months ending December.

The volumes dropped marginally by 0.7 per cent to 615 million kilos , compared to 619.5 million kilos recorded during the same period in 2019.

There was however high supply from the region, in addition to the global oversupply which affected the prices.

“High volumes of tea produced in the East African region and elsewhere on the globe have contributed to the continued price decline in the global market,” KTDA management services managing director, Alfred Njagi, said.

The Mombasa Tea Auction is one of the largest in the world where teas from Kenya, Uganda, Rwanda, Tanzania, Malawi, Ethiopia and the Democratic Republic of Congo are traded.