Sri Lanka government to buy tea to support prices

Oct 27, 2008 (LBO) – Sri Lanka’s state-run tea promotion and regulatory body will buy large stocks of tea at auctions in Colombo this week, in a bid to support prices, government officials and brokers said.

Commodities have been falling across the board and attempts by the organization of petroleum exporters (OPEC) to cut production and drive oil prices have had no success so far.

OPEC controls only 40 percent of global oil production, and has historically failed miserably to control oil prices when US monetary policy was benign, including the mid 1980s and the 1990s when prices fell to around 10 US dollars a barrel.

Commodity prices spiked to unprecedented levels in 2008 amidst money printing by the US Federal Reserve, reminiscent of the 1973 ‘oil shock’ when excessive money printing forced the US dollar off the gold standard and the dollar became a paper fiat money.

Classical economists and the International Monetary Fund predicted the collapse of the commodity bubble in 2008 after an under