Tea prices stay flat as Ukraine, Russia war dampens demand

Commodities

Tea prices stay flat as Ukraine, Russia war dampens demand


tea

A woman plucks tea on a farm in Kiptagich, Kuresoi South in Nakuru County along the Olenguruone- Bomet road in this photo taken on Monday, May 03, 2021. PHOTO | JOHN NJOROGE | NMG

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Summary

  • A kilogram of the commodity plateaued at $ 2.3 (Sh263), which is the same price that it fetched in the previous sale.
  • This saw the volumes of tea that were not sold drop to 18 percent in the auction, down from 25 percent in the previous one.
  • Prices have been declining consistently in the last four weeks.

Tea prices at the Mombasa auction remained flat in the latest sale, forcing traders to offload most of the stocks during the trading.

A kilogram of the commodity plateaued at $ 2.3 (Sh263), which is the same price that it fetched in the previous sale.

This saw the volumes of tea that were not sold drop to 18 percent in the auction, down from 25 percent in the previous one.

“There was a fairly good demand for the 197,432 packages (12.9 million kilos) for sale with 162,591 packages (10.6 million) being sold as prices closely followed quality, about 17.65 of the packages remained unsold,” market report from East African Tea Trade Association (Eatta) shows.

Prices have been declining consistently in the last four weeks. This looks set to continue hurting incomes from one of Kenya’s leading foreign exchange sources as the war in Eastern Europe rages.

According to Eatta, exporters to the Russian market continued to be quiet during the auction marking the fourth week of inactivity from them at the trading floor.

Demand for tea in the Russian market has been subdued by the ongoing war between Moscow and Ukraine, which is currently on the fourth week.

Russia has been slapped with sanctions by European countries and the US.

Some sanctions include the exclusion of Moscow from SWIFT – a payment system that allows banks to transact with other financial institutions.

“There was improved inquiry from Egyptian Packers with useful interest but at lower levels from Pakistan Packers, Yemen and other Middle Eastern countries. UK and Sudan maintained good but selective activity. Russia was quiet, ”says Eatta.

Traders are jittery of selling tea to Russia, which is one of the top 10 buyers of Kenya’s beverage, for fears that it will take them long to get payments for supplies made as the business is normally transacted in dollars.

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