2017 tea prices hit record highs

Japan concerned over chemical residues in tea

by Steve A. Morrell

Sri Lanka had an extraordinary year with prices for Ceylon Tea climbing significantly above the rest of the world, John Keells PLC Brokers said in its report commenting on price performances in 2017.

January to December 2017 National Average was Rs. 618.14 per kilo compared with Rs. 468.61 — around 13 percent more than the price fetched in 2016.

"There was a commendable increase in prices during 2017", the report said. The highest gain was from Western High Growns selling at about 14 percent above the market average.

Colombo Tea Auctions 2018 did get off to a ‘not too bad’ price average, a brokering source said, but in comparison with 2017, the market declined.

The drop in Westerns and Nuwara Eliyas were relative to Japan’s reticence in their demand for Western BOP and BOPF’s, brokers said.

If Japan’s concerns on, for instance, the Maximum Residual Levels (MRL) (meaning chemical content in teas shipped to Japan) was not addressed in the immediate future, Westerns and Nuwara Eliyas would feature badly in the short term, they warned.

Brokers said that in terms of market information, the Tea Board was actively pursuing negotiations with Japan to arrive at a negotiated settlement. Otherwise, the Japan poser could seriously affect the Western quality season, they further cautioned.

Japan was a major buyer of quality Westerns and Nuwara Eliyas, they noted, while pointing out that Western quality season teas now being produced were substantially good.

This week’s auction experienced declining western prices by as much as Rs. 20 to 30 per kilo. It was also reported some invoices remained unsold.

The ‘Japan syndrome’ could be far more disastrous than the Russian problem, they said. "Speedy resolution was now not an option, but an urgent solution".

Could the MRL affect other countries as well? Brokers were positive that other countries too could be affected. But, taking India as an example, they said the country was now in winter with production low. In large part, India may not be a state of concern at this time of the year.

However, buoyancy in prices being overshadowed by the MRL did have some respite that prices in 2017 were the best on record for Sri Lanka.

The opening auction quantity for season 2018 totaled 5.9 million kilos. Ex-estate offerings met with less demand.

Turkey, Russia and CIS Countries were active, while Iraq and Libya lent excellent support, the report said.

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