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Tea auction volumes up, on back of June seasonal rains

by July 17, 2017 General

Sales from tea have recorded the highest volume in sales after activity at the Mombasa tea auction recorded sales of 8.3 million kilogrammes last week, the highest volume in the past 20 weeks.

According to East Africa Tea Trade Association, price per kilo of the beverage improved marginally from Sh281 the previous week to Sh287.

The increase in production and global prices is good news to the sector which is reeling from effects of the prolonged drought experienced from last year. Tea Directorate projected a 12 per cent drop in production from 473 million kilogramnmes last year due to the drought.

The slight increase in production is attributed to short rains across tea production zones in the country for the past one month. If this trend persist, Kenya will likely benefit from the current high global prices brought about by a decrease in global production of 11 per cent.

Like Kenya, production in India and Singapore, some of the leading tea producers in the world, was hampered by the effects of climate change.

India’s production is likely to be 15 to 20 million kilos less than last year’s output of 1.24 billion kilogrammes despite rising consumption. Singapore on the other hand is expected to experience a 13 per cent drop due to flooding and landslides early this year.

Analysts argue that even though China, the world’s leading tea producer is expecting better production, it is going to have less impact on the global prices considering that most of its produce is consumed locally.

‘’Kenya, which exports up to 95 per cent of her produce is going to reap big from this drop in production,’’ reads a statement in the World Tea Directory

The data at the Mombasa Auction, in its 29th week, shows 8,303,201 kilogrammes were traded last week, up from 7,960,652 recorded the previous week. It recorded the least sales in the sixth week where 5,994,954 kilogrammes were traded.

The highest volumes were recorded in the second week this year where 8,882,302 kilogrammes were moved. This is however less compared to the high of 11,049,484 kilogrammes recorded during the fourth week last year.

The TD report released early this year recommend farmers to adopt measures to preserve biological diversity in order to insulate themselves from climate change uncertainties.

Tea is Kenya’s second-biggest source of foreign-currency earnings after remittances from citizens living abroad.

Last year, the country exported 422 million kilogrammes, earning Sh127.3 billion, down from Sh129.4 billion the previous year.