Tea prices are managing some of the buoyancy achieved in other agricultural commodity markets, despite worries over purchases by key importer Russia, Camellia said, although concerns remain over signs of waning demand.
Camellia, which operates more than 34,000 hectares of tea plantations in Bangladesh, India, Kenya and Malawi, said that 2022 had “started well with good prices being achieved in the Kenya tea market and a strong opening for India and Bangladesh”.
In Kenya’s benchmark Mombasa market, prices hit a four-year high of $2.80 per kilogramme in January, before easing back to $2,25 per kilogramme as of last week.
In the north Indian market, standard CTC teas in April soared by 60% to top $2.30 per kilogramme, a historically high level, if one also witnessed for much of 2020, as constraints on pickers forced by Covid squeezed supplies.
‘Stocks are now depleted’
The group noted the role of dwindling inventories in supporting prices of some teas, with this year for Darjeeling seeing “the last of the limited tea stocks left over from 2021 sold and the first auction of the new season opened in March with strong pricing.
“The market has remained firm for the early part of the new season.”
In Bangladesh, “the market for new-season teas has started firm and is expected to remain relatively stable as stocks are now depleted and the new season production has yet to gain momentum”.
However, it flagged too the threat posed by Western sanctions imposed on Russia, the world’s third largest importer of tea, following the country’s invasion of Ukraine.
“Whilst there does not appear to have been any impact on tea prices at this stage it remains early in the season for India, and the impact that sanctions [on Russia] will have on the market remains uncertain.”
Evidence appears mixed so far of tea market resilience to concerns among some merchants of dealing with Russian buyers for fear of payments being blocked.
In the latest Kenyan auction, for instance, some plainer teas “managed to trade firm to $0.10 per kilogramme dearer due to good interest from Egypt and European Union buyers”, merchant Van Rees said.
However, more flavoury KTDA EoR PF1s, of which Russia has historically been a notable importer, “traded irregularly steady to easier, with a large buyer remaining absent in this segment for the third week”.
Sri Lanka has blamed a loss of Russian and Ukrainian demand for fuelling an 8.8% dip to 63.7m kilogrammes in exports in the January-to-March period, a decline for which a lack of fertilizer is also being blamed, in crimping output
Kenya’s tea imports for the quarter fell by 11.1% to 135,721 tonnes, although on a value basis increased by some 10% thanks to higher prices.