Colombo should continue its period of consolidation and recovery from the 1999 debacle. The year 2000 was one of consolidation. It is a considerable achievement considering that prices dropped 25% from September 1998 to June 1999. Since then this year over 270 Mnkg of tea has been sold in a market that has risen steadily. A key factor has been the resumption of active buying for Russia/CIS. Middle Eastern markets the traditional safety net of Sri Lanka’s tea trade also stepped up purchases. Stronger oil prices helped the economies of both these markets. The Public Auction Rupee average in 2000 was consistently higher YoY. But in US Dollar terms even at the peak close of year levels, Colombo’s prices are still lower than 97/98 pre Rouble crash levels. The devalued Rupee will add further value for producers and traders. This year’s closing rates are a strong positive signal of what is in store at least during the first half of 2001.

Let us consider the main national factors first. The Western quality season during the first quarter will segment the market clearly between better and other teas. The former segment, which is unique to this country, will grow at the expense of the plainer teas. This would draw traditional buyers of these seasonal quality teas to Colombo. Demand for Russia/CIS would be the platform from which the market for these teas will be launched. We cannot expect unseasonal rains, which played a major part in the record production achieved, to be taken for granted. We could expect therefore, a drop in production during this period. Low Growns will continue their price trend subject to seasonal changes. Even at current Rupee rates Colombo’s prices are still attractive to the Middle East market. Consumers in Russia/CIS should continue to demand superior tasting Ceylon Teas. In Russia, Indian teas are due to be subject to the same taxes as those from other origins from January 2001.-ASIA SIYAKA