Sri Lanka tea prices revive at auction, crop shortfall seen

Jan 09, 2009 (LBO) - Sri Lankan tea prices revived at the first auction of the year this week with the industry saying a shortfall in the crop and the forthcoming 'quality season' should ensure better earnings in the first quarter.





Anil Perera, head of the Private Tea Factory Owners Association, said the shortfall in crop and the onset of the Western quality season should ensure prices remain strong.

Sri Lanka's Western quality season, when tea gardens on the western slopes of the central massif produce flavoury teas, is just kicking off, he said.

Forbes and Walker Tea Brokers said crop intakes have declined in all planting districts with the exception of low grown districts.

"There was strong competition amongst the tea bag shippers which would be the main contributory factor for this movement in prices (at the auctions).

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Prices at the Colombo auction crashed last October with the collapse of the global commodities bubble.

The sudden plunge in prices created cash flow problems for cultivators and tea factory owners, prompting the state-run tea board to intervene and buy at the auctions.

. Brokers Asia Siyaka Commodities said there was "strong demand" for low grown varieties, which account for the bulk of