April 27, 2022
1 Comment
COLOMBO
TEA MARKET
REPORT – SALE NO 41
18TH / 19TH OCTOBER 2022
AUCTION QUANTITIES ON OFFER THIS WEEK
EX ESTATE CATALOGUES – 698 Lots / 805,207 Kgs
HIGH + MEDIUM CATALOGUES – 1,553 Lots / 766,704 Kgs
LOW GROWN CATALOGUES – 5,161 Lots / 2,287,619 Kgs
PREMIUM FLOWERY CATALOGUES – 417 Lots / 69,118 Kgs
SECONDARY OFF GRADE CATALOGUES – 2,218 Lots / 1,188,474 Kgs
DUST CATALOGUES – 431 Lots / 393,878 Kgs
TOTAL OFFERINGS – 10,478 Lots / 5,511,000 Kgs
Unorthodox (CTC Offerings) – 10,865 Pkgs / 582,203 Kgs
Reprints – 957 Lots / 474,032 Kgs
Total No of Pkgs on offer – 145,022
QUANTITIES OF TEA SOLD THROUGH APPROVED CHANNELS – 2022 / 2021 (+/-) IN MILL Kgs
QUANTITIES OF TEA SOLD THROUGH APPROVED CHANNELS TO-DATE – 2022 / 2021 (+/-) IN MILL Kgs
PUBLIC AUCTION – 193,387,413 Kgs / 232,538,013 Kgs (-39.1)
PRIVATE SALE TREATY – 3,323,361 Kgs / 4,803,892 Kgs (-1.5)
FORWARD CONTRACT MECHANISM – 1,507,170 Kgs / 1,743,530 Kgs (-0.2)
DIRECT SALE MECHANISM – NIL/NIL
TOTAL – 198,217,944 Kgs / 239,085,435 Kgs (-40.8)
BMFANNINGS / REFUSE TEA – 5,143,146 Kgs / 8,352,795 Kgs (-3.3)
- The deficit in terms of the total quantities sold for the year, at 40.8 million kgs, is indicative of the reduction in production in 2022, as against 2021.
- As pointed out several times, the forward contract mechanism of sale reflects a modest reduction in quantities sold given the current environment, which is a reflection of procurement strategies employed by buyers, where securing quantities ahead of schedule to mitigate price volatility appears to be in place.
- BM Fannings shows a significant reduction of 3.3 million kgs (39%), which perhaps is a result of plantations employing varied strategies in terms of their management and disposal of refuse tea.
FORWARD AUCTION QUANTITIES
SALE NO 42 – 25TH / 26TH OCTOBER 2022
EX ESTATE – 778,180 Kgs
HIGH + MEDIUM – 761,299 Kgs
LOW GROWNS – 2,250,548 Kgs
PREMIUM FLOWERY – 61,633 Kgs
OFF GRADES – 1,088,152 Kgs
DUSTS – 415,090 Kgs
TOTAL – 5,354,902 Kgs
SALE NO 43 – 01ST / 02ND NOVEMBER 2022
EX ESTATE – 756,857 Kgs
HIGH + MEDIUM – 691,863 Kgs
LOW GROWNS – 2,199,470 Kgs
PREMIUM FLOWERY – 57,553 Kgs
OFF GRADES – 1,221,123 Kgs
DUSTS – 416,756 Kgs
TOTAL – 5,343,622 Kgs
Sale No 44 – 08TH / 09TH NOVEMBER 2022 – Catalogues closed on 20th October 2022
Sale No 45 – 15TH / 16TH NOVEMBER 2022 – Catalogues due to close on 27th October 2022
• Total auction quantities have stabilized with the next two auction offerings exceeding 5.0 million kgs.
• Secondary Off grades in particular show an increase in quantity at sale 43, which perhaps reflects the average to moderate quality of leaf harvested.
• Other catalogue categories show pleasing stability and reasonable quantities for the time of year, given the challenges faced by producers.
MARKET / PRICE MOVEMENT
HIGH GROWN EX-ESTATE – Fair Demand
BOP – Better Westerns sold around last levels. Select improved below best varieties appreciated in value, whilst all other Western categories tended lower. Nuwara Eliyas sold around last. Uva / Uda Pussellawas barely maintained last levels.BOPF – The better category Westerns, along with their below best counterparts sold around last levels. Nuwara Elias were hardly represented. Uda Pussellawa’s sold around last. Better Uvas declined in value, others held firm.
HIGH & MEDIUM ORTHODOX – Fair Demand
BOP/BOPF – BOP’s declined sharply, whilst the BOPF sold around last.OP/OPA – Sold around last levels.PEK/PEK1 – All categories eased USC 15 P/Kg.FBOP/FBOP1 – Both categories eased in value, in some cases quite substantially.
LOW GROWN – Demand
OP1/BOP1 – OP1’s sold at firm to easier levels. Select better BOP1’s held firm. Others were a lower trend.OP/OPA – OP varieties maintained last levels. Better OPA were dearer, whilst the secondary categories sold around last.PEK/PEK1 – PEK varieties sold around last. PEK1’s appreciated irregularly following quality.BOP/BOPF – Better BOP’s eased in value, whilst others sold around last. BOPF eased all around.FBOP/FBOP1 – Most categories of FBOP/FBOP1 eased irregularly in value.FBOPF/FBOPF1 – A few select best stylish tippy varieties appreciated in value. Others declined irregularly.
SECONDARY OFF GRADES – Fair Demand.
FGS/FGS1 – The brighter liquoring types with cleaner leaf appreciated USC 2-5 P/Kg. Below best varieties were USC 10 P/Kg lower. Poorer category teas met with good demand and were USC 15 P/Kg above last.BP/BM – Most categories appreciated USC 10 P/Kg.BOP1A – Cleaner leaf types sold around last. The poorer category teas appreciated USC 10 P/Kg.
DUSTS – Demand
DUST 1 – Better bright liquoring primary DUSTS declined in value. A few of the improved below best varieties and the poorer sorts appreciated USC 10-15 P/Kg. Low grown primaries eased all around.DUST – Bright liquoring cleaner secondaries appreciated USC 10 P/Kg. Poorer sorts declined in value. Low grown varieties were USC 10-15 P/Kg lower.
UNORTHODOX TEAS (CTC) – Good Demand
BP1 – High grown varieties were hardly represented. Medium grown types sold around last. Low grown categories declined USC 15-30 P/Kg.PF1 – The better High grown varieties declined substantially. Mediums followed a similar trend. Low growns sold around last.PD – High grown types appreciated USC 10-15 P/Kg. Mediums followed a similar trend. Low grown categories were USC 20-25 P/Kg dearer.
SRI LANKA – FIRST FIFTEEN TEA EXPORT MARKETS
JAN – SEP 2022
- Iraq continues to head the importing countries for Sri Lanka tea with 35.3 million kilos for the period under review. This performance comes with an impressive growth of 7.2 million kilos over 2021.
- Azerbaijan, Germany, USA , UAE and Taiwan show pleasing growth, with Azerbaijan being particularly impressive.
- Turkiye shows a significant decline, whilst Russia, Syria, Jordon, China, Iran and Japan also show deficits over 2021.
- Saudi Arabia is reasonably stable.
SRI LANKA TEA EXPORT GRID
JAN – SEP 2022
TEA AUCTION AVERAGES
- The total sale average for sale 40, was recorded at LKR 1,519.72 P/Kg, as against LKR 609.92 P/Kg in 2021 and LKR 645.07 P/Kg in 2020.
- The corresponding USD equivalent, converted at exchange rates prevalent at the time was computed at USD 4.21 P/Kg in 2022, as against USD 3.07 P/Kg in 2021 and USD 3.54 P/Kg in 2020.
- The weekly comparisons reflect a very clear increase in both LKR and USD terms, which is indicative of the strong market in Colombo, amidst the ongoing supply concerns.
- Interestingly, the year to-date comparisons, records the 2022 to-date average at LKR 1,209.40 P/Kg, as against LKR 615.56 P/Kg in 2021 and LKR 627.88 P/Kg in 2020. The USD equivalent, converted at the exchange rates prevalent at the time was recorded at USD 3.35 P/Kg in 2022, as against USD 3.10 P/Kg in 2021 and USD 3.44 P/Kg in 2020.
- In summary, whilst the weekly average in 2022, both in LKR and USD terms is higher than the previous two years. The YTD comparisons reveal that the USD equivalent in 2020, is still higher than 2022. This is reflective of the significant depreciation of the LKR, as against the USD and other leading global currencies in 2022.
QUALITY
HIGH GROWN & MEDIUM GROWN SECTOR – The quality of dry leaf appearance in the forward sales is average. Liquoring characteristics are satisfactory.
LOW GROWN SECTOR –. The quality of dry leaf appearance is barely satisfactory. Liquoring characteristics are similar to last.
DEMAND
HIGH GROWN & MEDIUM GROWN SECTOR – With the increase in auction offerings, demand is expected to prevail for the select better teas, with a tailing off expected for their plainer, poorer leaf counterparts.
LOW GROWN SECTOR – Fair demand is expected to prevail.
COLOMBO TEA AUCTION OFFERINGS
- Auction quantities are satisfactory for the time of year and reflect a pleasing improvement in October.
SRI LANKA TEA PRODUCTION
The Sri Lanka tea production for the month of August 2022, was recorded at 20.9 million kgs, a deficit of 1.7 million kgs over the same month in 2021.
The average P/Month for the year 2022, was computed at 21.2 million kgs, as against an average of 24.7 million kgs for 2021 and 23.1 million kgs for 2020.
If we were to evaluate an end of year projection based on the current average, the year-end production would read as approx. 254.7 million kgs, a deficit of 41.8 million kgs for the year.
SRI LANKA TEA PRODUCTION – ELEVATIONAL / CATEGORY ANALYSIS
An elevational analysis of the production figures to Aug 2022, reveals that a significant deficit of 42.3 million kilos is evident for the period under review.
The Low Grown sector has been the main contributor towards the deficit, with a 24.8 million kilo contraction in crop.
Whilst the High Grown sector has gained marginally in terms of percentage contribution, the deficit at 7.6 million kilos against 2021 is quite significant. Medium Growns have declined in terms of percentage contribution, as well as realizing a deficit of 9.1 million kilos in the period under review.
Green tea also shows a decline, whilst the Unorthodox CTC varieties show a marginal increase for the year.
- A five-year analysis on crop, shows that the 2022 figures for May, June, July and Aug are the lowest for the last five years.
CURRENCIES – EXCHANGE RATE MOVEMENT TO-DATE
OUTLOOK – TEA
Auction quantities have shown an increase and as a result the market is expected to settle to more realistic levels of price. Some differences in value between the better-quality teas and their poorer counterparts is also expected, in view of an improvement in supply.
The low grown sector is expected to continue to sell well, since although an increase in offerings has been evident in October 2022, the overall deficit in supply is still quite significant.
COMMENTARY
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Tea Legacy (Pvt) Ltd
41, Manthrimulla Road
Attidiya, Sri Lanka.
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