Sri Lanka tea prices up on supply concerns

Sept 18, 2009 (LBO) - Sri Lankan tea prices were again propelled higher at the Colombo auctions this week by supply concerns stemming from a worker go-slow on upcountry estates and a global production shortfall, brokers said. Auctions prices are likely to stay high as drought in major tea exporting countries had reduced the crop creating a serious global shortfall in supply that is driving up both auction and retail prices, they said.

Sale volumes were lower than last week because labour unions had disrupted movement of tea to Colombo from estates to back demands for a wage which they agreed with plantations companies earlier this week.

Movement of tea from hill country estates to the auctions had resumed.

"There was good demand with an average price gain of 10-20 rupees a kilo," Forbes & Walker Tea Brokers said.

"The feature of the sale was the sharp escalation in prices for BOP (varieties) particularly for teas from the Western planting districts (in the hills) - a direct reflection on the extremely low availability."

Brokers Asia Siyaka Commodites said this week™s quantity was lower than last and the auction that closed last week had recorded volumes 17 percent lower than the current sale.