1Q tea exports value up, volume down

• Double digit rise in average FOB value per kilo

The country’s tea exports in the first quarter saw an increase value wise though in terms of quantity shipped was lower.

Total tea exports amounted to Rs. 42.28 billion in the first three months of this year, up by near 6% from Rs. 40 billion a year earlier. Approximate average unit FOB value per kilo was Rs. 595.85 up by 13% or Rs. 68 from Rs. 527.92 in the first quarter of last year.

Volume wise, exports amounted to 71 million kilos, down by 4.9 million kilos or 6% in comparison to first quarter of last year.

Exports of tea in bulk (Rs. 16 billion), packets (Rs. 18.5 billion) and green tea (Rs. 1.5 billion) saw increase in value wise over last year whilst tea in bags (Rs. 6 billion) instant tea (Rs. 336 million) were marginally down in 2013 first quarter. However the three categories showed increase in their average FOB price per kilo, all above Rs. 1,000 per kilo levels. Average price of other teas too rose.

Shipments of all forms of tea declined volume wise.

The first quarter performance reflected the continuity of recent trend of lower volume versus higher value.

In March tea exports volume wise dipped by 1.94 million kilos to 27 million whilst value wise it rose by Rs. 400 million to Rs. 16.3 billion.

 Approximate unit FOB value was up by 10% or Rs. 56.59 to Rs.604.64 per kilo.

Markets wise, CIS has retained the number one position though volumes are lower followed by Iran and Syria. Exports to United Arab Emirates, a trading hub especially for conflict stricken Arab countries have almost doubled from 2.4 million kilos to 4.1 million kilos. Shipments to Turkey and Kuwait have also increased whilst five Middle Eastern markets saw a dip.

Last year export earnings from tea, which account for about 15% of total export earnings, declined by 5.3% to $ 1.41 billion due to the export volume of tea declining by 0.9% to 320 million kilos alongside a drop in the average price of tea exported.

According to the Central Bank, although tea prices remained elevated in the world market since around May 2012 due to adverse weather conditions resulting in lower production in key producer countries, namely, Sri Lanka, Kenya and India, the average price of tea exported during the year was marginally lower at $ 4.41 a kilo compared to $ 4.62 a kilo recorded for 2011, which could be attributed to political instability in major tea markets in the Middle East affecting demand.

In a related development, there was good demand at last week’s tea auctions.

Forbes and Walker Tea Brokers said overall auction quantities were similar to the last Auction and totalled 7.3M/kgs. Low Growns continued to meet with good demand – although at firm to easier rates – whilst, High and Mid Grown small leafy teas witnessed a further decline this week.

Teas on offer in the Ex-Estate catalogue totalled 1.4M/kgs. Overall quality was irregular and barely maintained. Consequently, better Western BOP/BOPFs declined Rs.20-30 per kg. BOPs in the below best and plainer categories declined by Rs. 10-20 per kg – whilst the Corresponding BOPFs eased by Rs. 10 per kg. CTC teas sold firm to easier rates – particularly for the poor leaf sorts. The feature of the sale was the continued strong demand for Nuwara-Eliya types (leafy/small leaf teas) – which sold well in comparison to other teas from the High and Mid grown regions.

Low Growns totalled 3.3M/kgs in the Leafy/Tippy catalogue. There was fair general demand. In the Leafy catalogue, select best OP1/BOP1s were lower, whilst, the others and the cleaner teas maintained last levels. PEKs too were fully firm with a range of stylish PEK1s gaining Rs. 10-20 per kg. A fair cross section of clean/below best OP/OPAs were firm, whilst, most others declined Rs. 5-10 per kg. There was however fair demand at the lower end with prices being fully firm on last.

In the Tippy catalogue too, barring a few high priced FBOPs which were irregularly lower, others and FF1s were firm. At the lower end too, cleaner types were mostly firm. Others were easier to last.

“There was good demand from CIS, Turkey and Dubai, whilst Iraq, Kuwait too were active,” Forbes and Walker Tea Brokers said.