The Chairman of Ceylon Tea Brokers Plc, Chrisantha Perera says that unfortunately, given the performance for 2015, tea export earnings are unlikely to achieve the 2014 levels, unless there is a dramatic improvement in market conditions during the second half of 2015. The total Colombo auction average for the period January to June 2015 at Rs. 409.68 per kilo is substantially lower than the Rs.477.55 per kilo recorded during the corresponding period in 2014 and even lower than the corresponding average of Rs.422.77 in 2013.
“This disappointing performance covers all three elevations and is also lower when expressed in terms of the US Dollar equivalents. Consequently, Sri Lanka’s tea export earnings for the period January to June 2015, which includes imported tea re-exported has realized Rs. 90.78 billion amounting to an equivalent of USD 680 million compared with Rs.104.07 billion amounting to an equivalent of USD 780 million during the corresponding period in 2014,” Perera said.
He said a combination of factors has contributed to this disappointing performance during the first half of 2015. The drop in oil prices, together with trade sanctions in key markets such as Iran and the crisis in Russia and Ukraine, contributed collectively to this sharp fall in tea prices at the Colombo auctions. In our view, Sri Lanka was probably the most affected by these global issues, since we had the strongest presence in these markets compared to other Tea Producer/Exporter countries.
There appears to be a silver lining going into the second half of the year, although it may be too optimistic to predict a change of fortunes to the extent to overcome the declines during the first half of the year once the final performance for 2015 is recorded,” the Chairman said.
Meanwhile, Forbes & Walker Tea Brokers (Pvt) Ltd in their latest update said that whilst a total quantity of 7.7m kg was offered at the auction, there was less demand this week and prices were often lower to last week The weak market sentiment is possibly emanating due to the decline in oil prices and the weakening of the Russian Ruble which would no doubt adversely impact on the trading conditions in the CIS and the Middle East, the broker said.
The Russian Ruble fell sharply on Monday setting a new low for 2015 (70 Rubles per US$) as it reacted to the plunge in Chinese markets. Sri Lanka’s tea production for the month of July 2015 amounted to 25.79mn/kg, vis-à-vis 29.00mn/kg in 2014 (-3.2mn/kg). Cumulative tea production for the period Jan/ July 2015 recorded 99.02mn/kg as against 202.64mn/kg in 2014 (-3.6mn/kg). Cumulative exports for the period Jan/July 2015 including re-exports with imported tea amounted to 180.28 m/kg as against 187.25 m/kgs (-6.97m/kg) for the same period last year. Cumulative export earnings amounted to Rs.107.69 b showing a significant decline of Rs.15.54 b (-12.61%) as against the same period last year.
Country wise analysis of exports shows that Turkey continues as the largest export destination from Sri Lanka followed by Russia and Iraq. On further analysis of exports Pakistan, India, China, U.A.E. and Iraq have increased imports of Ceylon tea in comparison to last year’s figures.