Pent up demand to boost tea prices by end January

by Elmo Leonard

Pent up demand for Ceylon tea is expected to push Colombo auction prices way up by end-January. Then, the now poor quality manufactured teas, the repercussion of the go-slow of December will be exhausted.

This is already showing, with high elevation teas from the western Dimbulla plantation, the eastern Uva and intermediate Nuwara Eliyas fetching Rs. 300 to Rs. 400 (Rs. 109 for a US dollar) per kilo. It was the company-owned estates which took the brunt of the go-slow impact.

This pent up demand will come from all countries which buy good Ceylon high-growns, such as the European countries, in particular Germany and UK, and beyond, Russia and the CIS countries, the Colombo tea trade said.

Notwithstanding the intermediate showers, the eastern, or Dambulla-Dikoya quality tea season is expected to set in, in February, further boosting Colombo auction prices.

Of immediate value is that with the Eid Festival just concluded, the Middle Eastern countries are expected to begin buying, their preference, which are low growns, and will boost prices up in the proprietary small-grown sector.

Meanwhile, the depreciating rupee at 109 per US dollar is expected to rise to 112 per dollar end-March, and benefit the local grower, a Colombo based economist said.

Meanwhile, Sri Lanka's exports of tea up to end-November 2006 was $809 million as against $737 million during the corresponding months of 2005. In Sri Lanka rupee terms, the figure corresponds to 83 billion for 2006 and 73 million for 2005.

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