The tea industry continued its ill fate with indications that around 25% to 30% of all teas brought to the weekly auctions in Colombo would remain unsold.
Brokers say low prices and a lack of demand could lead to a liquidity shortfall ahead of the Sinhala Tamil New Year in April.
The low grown sector will be hit hardest due to its dependency on small holder leaf suppliers who take cash advance against future deliveries to celebrate the New Year.
Asia Siyaka Commodity Brokers said buyers held back orders at the weekly auctions, opting to “wait and see” developments in the Middle East.
“The word was out that overseas buyers had asked for current orders to be put on hold following the announcement by the US of its deadline for Iraq. ” Asia Siyaka says “the uncertainty is likely to continue.”
Brokers reported that there was selective buying from the CIS and a few Middle Eastern destinations, by buyers willing to hold for future shipments.
“The quantity of unsold teas as a result is likely to be higher than the past few weeks and we estimate that approximately 25-30% of all teas offered at the auction will remain without a home,” Asia Siyaka said. rn