Dwindling tea crop a concern – John Keells

Friday, 20 July 2012 00:30 - - {{hitsCtrl.values.hits}}

The dwindling tea crop and its impact on higher cost of production have raised concerns for the industry, according to commodity broker John Keells Ltd.

This view is contained in John Keells weekly tea market report, excerpts of which are as follows.

Five months on the trot, Sri Lanka’s monthly tea production has fallen short of last year’s corresponding months resulting in the to-date shortfall in 2012 now widening to 7.4 Mkgs. The latest production figures released by the Tea Board for the month of June records a shortfall of 3.9 Mkgs with all three elevations showing negative variances. High grown has recorded the highest deficit of 2.3 Mkgs followed by medium at 1.1 Mkgs. Comparatively, low grown have fared better with a marginal deficit of 0.3 Mkgs. Dry weather which has accounted for the crop shortfalls in Sri Lanka continues to plague the plantations in the high and medium grown sectors. After experiencing near monsoonal conditions last week giving hope of better intakes to come, weather conditions have once again turned dry, adversely affecting intakes. In view of the dry weather conditions, it is very likely that July 2012 crop too will fall short of the 25.1 Mkgs harvested last year. Whilst there is little hope of the South West Monsoon re-activating the situation on up country plantations is a cause for concern as the dwindling crops are contributing to higher production cost. In this situation the only solace for the plantations would be in the way of higher prices. The dry weather in the high and medium grown areas have not only affected crop intakes, but fertiliser applications and re-planting programs are well behind schedule. With the South West Monsoon being a complete failure, the next rains of any significance would be in October, November, and December when the North East Monsoon sets in. At the moment it looks some distance away. With the supply looking rather tight globally, due to major black tea producing countries experiencing adverse weather, there is bound to be stronger demand with prices being much dearer.