Tea production and exports last year is seen at record levels while the prognosis for 2011 is seen as ‘strong’, according to tea broker Forbes & Walker Ltd. In its annual report for 2010 and outlook for 2011, the veteran broking firm said production in 2010 is expected to an all time high of over 320 million kgs, up from the previous highest crop of 318.6 million kgs in 2008.
In looking ahead, the report said world tea prices are holding firm in all major producer countries despite excess production due to increasing consumption around the world.
This includes particularly absorption of tea by producing countries themselves and to a great extent the increasing consumption in India and China. Other larger tea importing nations such as Russian Federation, Iraq, Egypt, Pakistan, Japan etc. are also consuming more, the report added. “In addition, the low inventory levels maintained by most importing countries in 2009 would also have helped to absorb the increased volumes. Yet another factor that needs due consideration is the steady growth in oil prices which would have a positive impact particularly on Sri Lankan tea prices,” it said.
Tea export volumes from China for the first nine months of the year totalled 220 m/kgs vis-a-vis 233 million during the corresponding period of last year, around 6% lower compared with the first nine months of 2009. This could be attributed to higher domestic consumption, Forbes said adding that similarly, tea consumption in India is expected to rise to 870 million kgs in 2010 compared to 850 million in 2009, thereby reducing the surplus for exports.
It said these factors combined with the customarily lower volumes during the 1st quarter would ‘brew up a strong story for tea in 2011’.
Forbes said nevertheless the optimism for the tea market in 2011 must be linked with the accent on maintaining a reasonable and consistent quality throughout the year.
On tea output in 2010, it said low growns accounted for approximately 59% of the annual crop this year whilst high growns accounted for 24% and mediums, 17%.
Export revenue would also reach a new record in 2010 and possibly touch the $1.5 billion mark while tea prices peaked at a Colombo auction, all time, average of Rs.370.61 per kg against the previous all time high of Rs.360.45 per kg in 2009. Thi was a gain of Rs.10.16 per kg (approximately 3%) despite the appreciation of the Sri Lanka Rupee against the US dollar. High growns have moved up from Rs.319.70 per kg in 2009 to Rs.337.82 per kg in 2010, a gain of Rs.18.12 per kg (5.7%).
Medium growns moved up from Rs.315.47 per kg in 2009 to Rs.330.88 per kg in 2010, a gain of Rs.15.41 per kg (5%) while low growns rose from 388.16 per kg in 2009 to Rs.393.40 per kg in 2010, a gain of Rs.5.24 per kg (1.5%). The report said out of the main importers of Sri Lankan tea, some 72% of the business came from the Russia/CIS and the Middle East. The top 10 destinations account for almost 78% which includes 8.9 million kgs from Japan.