Sri Lanka tea market seen strengthening

 Sri Lankan tea prices seem to have bottomed out and are likely to gradually rise in future sales as crops come down and global demand remains strong, brokers said. Tea prices rose at this week's Colombo auction as volumes fell and quality improved. 

"With crop intakes from most plantation regions easing, and quality also showing an improvement, we believe that we have seen the bottom of the market and expect auction prices to keep moving up gradually as seen at the recent sales," brokers John Keells said.They reported crops as being "moderate" in all planting districts.
"After a run of depressed prices particularly in the month of May, the producers would welcome the ascending prices witnessed at the last two sales," the brokers said.

"The current demand seen at the Colombo auctions is a clear indication that global demand is sufficiently buoyant."Low grown teas cultivated in the south mainly by small farmers met with "excellent demand" at this week's sale, they said.
"In spite of the large volumes that we have seen in the recent past, prices for the best on offer appreciated in value, whilst the below best varieties in the leafy category too maintained last levels with the exception of the Pekoe1 grade."

Forbes & Walker Tea Brokers said crops seem to be easing in most 'high and mid-grown' elevation planting districts. "Consequently, auction quantities are likely to record a gradual decline in the ensuing sales, particularly in respect of the High and Mid-growns," they said."Therefore, with a more balanced availability commencing July and through until September, it would be reasonable to conclude that prices would slowly commence to strengthen from now on."

Source: June 17, 2010 (LBO)