Sri Lankan tea prices weaken further

May 29, 2009 (LBO) – Sri Lankan tea prices sagged further this week, pushed down by larger volumes, lower quality and a stronger rupee, brokers said. The rupee weakened sharply against the dollar earlier this year but steadied and even strengthened in recent weeks.

The better teas were “readily absorbed”, while the poor leaf sorts were often neglected and where sold, lost out sharply in value, Forbes & Walker Tea Brokers said. The total of 7.34 million kilos on offer at the Colombo auctions made it the largest auction quantity for the year, Asia Siyaka Commodities said.

Prices of both low grown teas, which make up the bulk of the national production, and high grown teas, fell except for the better made teas, they said.

“Given the volume of tea on offer, the relatively lower quality and the strengthening rupee, the market can be termed satisfactory,” Asia Siyaka said in a report.

Sri Lanka’s tea production is recovering from the effects of severe drought earlier this year.

Forbes & Walker Tea Brokers said that given the quantity on offer, demand was “reasonably good”, albeit mostly at lower levels.

“The bearish trend exp