Sri Lanka tea prices seen heading for correction

June 19, 2008 (LBO) – Sri Lankan tea prices appear to be heading for a correction with many grades from the estates easing at this week's Colombo auctions where a larger volume was on offer, brokers said. "In fact the previous record for the period was 138 million kg in 2006 in which year Sri Lanka achieved a highest ever annual production of 314.8 million kg. Despite very wet weather we expect June 2008 to exceed last year's quantity. The highest crop figure for June was 29.3 million kg in 2006." Bartleet Produce Marketing said the quantity of tea arriving at the Colombo auction this week increased to 8.08 million kg from 6.89 million kg traded the previous week.

There was lower demand for teas from the estates compared with last week while the ex-estate crops were also lower.

"In the Ex-estate segment, the market witnessed an overall lower demand as compared to last week," it said in a market report.

But low grown teas, cultivated mainly by small holders in the southern districts, continued to sell well.

The stronger-than-usual buying in recent weeks that had kept prices high was expected to end, the brokers said.

"The unusual buying is anticipated to fade out over the

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