Tea trade to face further challenges

The entire tea trade heaved a sigh of relief as the wage negotiations ended on Tuesday with the parties signing the agreement in the presence of President Mahinda Rajapaksa, a media release from John Keells said. Although the work stoppage should now be behind us, the plantation sector as well as the export trade would continue to face challenges until normalcy in product quantity and quality returns to normal.

The final auction for the year on December 20 concluded with fairly sharp price increases and it was evident that buyers were falling short of their purchase requirements. The absence of an auction next week and the rapidly declining offer quantities from the higher elevations resulted in almost panic buying.

The teas that appreciated the most were the varieties that were suited for the tea bags and it does appear that exporters were desperate to fulfill orders and ensure continuity of the supply of Ceylon tea irrespective of the high prices.

We could therefore expect many exporters to have purchased teas at a considerable loss. From some traditional markets the demand appeared to wane and the prices for a few varieties failed to generate much interest. Low grown teas also benefited by the market buoyancy.