The recent 3 % devaluation of the Rupee has helped make Sri Lankan tea more competitive overseas while interest is gradually returning from the country’s key markets in the Middle East where political unrest disrupted the supply chain, a long-standing tea broking firm said.
Forbes & Walker Ltd said in its annual tea industry review for 2011 and prospects in 2012, that most other key producer/consumer nations also experienced devaluation in their currencies last year.
It predicted a tight supply situation this year because though global production last year saw an increase of around 90 million kg, global consumption per annum is rising and would require a further 60-70 million kg this year.
Forbes said additional buying interest is likely to emanate for seasonal teas from the Western slopes; and (among other matters) improved market activity from most importing countries is likely to emerge as the current price levels are significantly lower than the corresponding levels in 2010 and 2011.
“These factors would enable to project a cautiously optimistic market scenario for 2012 with the expectation that the Colombo Auction averages should move up from the low levels seen during the last quarter of 2011, whilst, it may be over optimistic to predict the dizzy heights that we reached during the first quarter of 2011 at this point of time,” the report said.
Reviewing the past year’s performance, the broking firm said a significant development during the first quarter was the spate of social unrest that spread across the Arab world and North Africa affecting some of our key consumer countries. Tunisia, Lybia and Syria are some of the key destinations that were affected by these developments. Whilst, these developments were unfolding, Japan too was faced with a massive earth quake which resulted in a Tsunami.
"These events no doubt provided a lot of uncertainty," it said. Towards the end of the first quarter low grown prices lost its momentum, due to the uncertainty and unrest in markets like Libya, Syria and Tunisia.
Forbes said if the December crop exceeds 29.4 million kg, the total production for the year will surpass last year's figure of 331.4 million kg, establishing a new record.