WEAK

Tea prices gain but remain below 2-dollar mark

It fetched $1.87 a kilo at the auction this week.

In Summary

•This week's price is up from last week's $1.84 a kilo.

•A price below two dollars is considered not good, according to the East African Tea Trade Association.

Tea farmers at Mutunguru Tea Buying Center load tea bags into a truck belonging to Ngorongo Tea Factory/
Tea farmers at Mutunguru Tea Buying Center load tea bags into a truck belonging to Ngorongo Tea Factory/
Image: FILE

Tea prices at the weekly Mombasa auction gained marginally for the second week but remains below the two-dollar mark since March, signaling low earnings for farmers.

A kilo fetched an average $1.87 (Sh201.12 ) up from last week's $1.84 (Sh197.89) even as volumes traded increased.

Out of 193,240 packages (12,804,306.50) kilos) available for sale, 173,300 packages (11,465,952 kilos) were sold. 10.32 per cent packages remained unsold, the East African Tea Trade Association (EATTA) notes in its market report.

The total volumes traded at this week's secondary auction were 421,034 kilos more than last week.

Kazakhstan and other CIS nations showed more and strong support with strong interest from Egyptian Packers and were forceful while Yemen, other Middle Eastern countries and UK increased activity,”EATTA managing director Edward Mudibo notes in the report.

Pakistan Packers, Sudan, Russia and Bazaar showed good inquiry with some interest from Iran while Afghanistan were quieter.

“Local Packers were active in line with price. Somalia showed good activity at the lower end of the market,” Mudibo adds.

The commodity has averaged $1.87 (Sh201.12) so far this year, only fetching a $2(Sh215.10) price once, in March.

Average tea auction prices shed some six per cent last year compared to the previous year, as high production and a depressed market occasioned by Covid-19 affected demand.

In 2019, it fetched an average $2.05 (Sh220.48) at the Mombasa weekly auction.

According to KTDA, oversupply of tea at the Mombasa auction, last year, affected prices.

The commodity recorded a 9.8 per cent growth on volumes availed for sale which closed at a total 486.5 million kilos (486,581,381) compared to 433.3 million kilos (433,336, 303) the previous year, occasioned by overproduction of the green leaf by farmers.

Farmer's earnings were cushioned by a stronger dollar to the Kenyan Shilling as the commodity trades on the US currency, with the shilling hitting a historic low of an average 111.1 units to the US dollar in December.

It has gained this year, quoted at an average 107.5 to the dollar on Friday.

The low prices this year however are likely to dent farmer's pockets.

The prices are highly driven by climatic conditions and demand in core markets of Pakistan which takes up 38 per cent of Kenya's tea exports, Egypt, the UK and Sudan, according to EATTA.

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.