COMMODITY TRADING

Pakistan dominates tea auction, prices remain above $2

This comes amid removal of attestation fee on Kenyan tea exports.

In Summary

•A kilo averaged $2.01 (Sh221.12) this week despite being a slight drop from $2.04(Sh224.42) last week.

•It is the third time this year the commodity is fetching a price above two dollars, having averaged $1.70 (Sh187.02) since January and selling at $2(Sh220.02) in March.

Packaged tea for export at warehouses in Shimanzi, Mombasa/FILE
Packaged tea for export at warehouses in Shimanzi, Mombasa/FILE

Tea farmers can smile as auction prices remained above the two-dollar mark for the second week running, after last week's rebound.

A kilo averaged $2.01 (Sh221.12) this week but witnessed a slight drop from $2.04(Sh224.42) last week, with a strong dollar against the shilling meaning farmers will earn more.

It is the third time this year the commodity is fetching a price above two dollars, having averaged $1.70 (Sh187.02) since January and selling at $2(Sh220.02) in March.

It touched a historic low of $1.55 (Sh170.52) in July this year, prompting the government to set a minimum price to cushion farmers.

“Anything below two dollars is not good,” East African Tea Trade Association (EATTA) managing director, Edward Mudibo, told the Star.

This week, Pakistan Packers dominated the auction coinciding with the removal of Attestation Fee on Kenyan exports, on Tuesday.

Calculated at 0.5 per cent of the entire export volume for the tea exporters from Kenya, the fee made Kenyan tea costlier upon landing in Pakistan compared to other teas, thus depressing sales.

The two countries have agreed to remove the fee and the rule that required tea exporters from Kenya to get their export documents confirmed and approved by the Pakistan High Commission, before shipping.

“Pakistan Packers lent strong support and were dominant,” Mudibo says in the weekly market report released yesterday.

There was also strong enquiry from Sudan and Bazaar while Yemen, other middle eastern countries and UK showed more interest.

“Egyptian Packers were active with Kazakhstan, other CIS nations and Russia selective while Afghanistan were quiet with Iran subdued. Local Packers showed more and useful activity on account of price. Somalia were more active at the lower end of the market,” the EATTA report reads.

The total volume traded was 571,425.00 kilos more than last week.

There was a good general demand prevailed for the 132,399 packages (8,664,192.50 kilos) available at irregular levels for sale with 96,584 packages (6,250,381 Kilos) being sold. 27.11 per cent packages remained unsold,” the association notes.

The government in July directed that tea volumes be held for future sales, in case of a major price slump.

According to agriculture Cabinet Secretary Peter Munya, withholding of tea  when rates fall beyond the reserve  price will help to stabilise prices, benefiting farmers in the long-run.

He says the government will continue withdrawing tea from the auction if the prices do not reflect the minimum set rate but assured farmers that they will be paid.

Teas not sold remain ready to be moved to the market at the right price,” said the CS.

The minimum reserve price for Kenyan processed tea at the Mombasa auction is set at Sh183 ($1.66).