Sri Lanka tea prices recover

Sep 08, 2011 (LBO) - Prices of teas made by Sri Lankan plantation company estates rose this week although still below production cost as supply fell and demand improved with brokers saying the market seems to have bottomed out. There was good demand at the Colombo auctions with improved buying mainly from shippers to the Commonwealth of Independent States, the biggest market, Forbes & Walker Tea Brokers said.

The better demand combined with low availability triggered price hikes of 10-30 rupees a kilo for some types of tea.

"A tremendous sign of relief (from) the producer sector, although even at these prices, it makes the plantation sector not viable," the brokers said.

Production costs had been pushed up with a recent wage hike given to estate workers.

"It is noteworthy to mention the appreciation in prices as the sale progressed, which would be an indication of the market having bottomed off," Forbes & Walker said.

"As volumes continue to decline over the forthcoming sales, it would be reasonable to conclude that the prices are most likely to appreciate further from now on."

The slide in Sri Lankan tea prices as unrest in the Middle East, a big market, hit demand and created shipment and paym