ECONOMYNEXT – Prices for low-growth Ceylon teas in Sri Lanka hit Rs 1,639.42 per kilogram at auction in the third week of July, down from the previous week’s high of Rs 1,629.93 per kilogram, according to industry data, as the currency tumbled sharply on the back of poorly targeted interest rates and a botched float with a call obligation.
At last week’s auction on July 20, low growth averaged $4.54 per kilogram, down from $2.94 a year earlier. Global commodity prices have risen due to US money printing, which tends to weaken the dollar.
At the July 20 auction, Pothotuwa Estate’s Low Grown BOP1 grade fetched Rs4,100 per kilogram and Pothotuwa OP1 fetched Rs4,050 per kilogram, according to data from Ceylon Tea Brokers.
In Sri Lanka, mercantilists and soft-peggers generally claim that inflation comes from import prices. However, the prices of all traded goods, whether imported or exported, increase when the central bank prints money to depreciate the currency.
World prices also rise in dollar terms (commodity booms) when the US Federal Reserve prints money. Right now, commodity prices are booming due to the so-called “Powell bubble”, the worst since the Greenspan-Bernanke bubble that burst in 2008/2009.
In US dollar terms, the national average for sales as of June 30 was $3.46 per kilogram, down from $3.30 per kilogram last year.
The broadleaf/Tippy Low Grown variety saw an increase in sales demand of 2.3 million kilograms from the level unchanged from the previous week.
The Ex-Estate sold 0.54 million kg last week against 0.56 million kg the previous week.
Low growth
Low Grown attracts the highest prices for Ceylon tea.
In the auction for the week of July 20, the average Low Grown Tea sales were Rs 1,639.42 compared to Rs 1,629.93 the previous week.
Also in dollar terms, prices had slipped to $4.54 per kilogram from $4.51 in the June 1 sale.
The best maintained BOP1 Selects while upgraded below the best were firm to more expensive. Others and the poorest were also totally firm.
OP1 Select best OP1 was firm while best and under best were slightly easier. Low-end teas maintained. Below is the best relaxed from 60 rupees per kilogram
OP The well-made sorts with the cleanser below were perfectly firm at more expensive. The others and the poorest were slightly lower.
OPA Well Done sorts with the cleanser below the best-tracked OP counterparts. Others and the poorest were inferior to last.
OPA Well Done sorts with the cleanser below the best-tracked OP counterparts. Others and the poorest were inferior to last.
PEKOE/PEKOE1 Select the best teas maintained while the bold PEK full range was slightly lower. The best cleaner teas were perfectly firm. Others were inferior.
BOP Few of the selected invoices were firm for the last time. Others were irregularly lower.
BOPF Select best and best were slightly lower while others were significantly lower than last.
FBOPF/FBOPF1 Few of the cleaner, tippy varieties held their own while all the others declined slightly.
High Grown
The average High Grown auction was 1,270.26 rupees, compared to 1,217.59.
In BOP teas, Best Western is maintained. Below, the best were firm at 50 rupees per kilogram more expensive. Simpler types increased
40 rupees per kg and above.
Those from Nuwara Eliya were easier by 30 rupees per kilogram. Those of Uda Pussellawa were firm. Uva earned 30-40 rupees per kilogram.
In the BOPF category, Best Western was firm. Below, the better and simpler types were selectively more expensive. At Nuwara Eliya
were weaker. Those of Uda Pussellawa were irregular after quality. Uva is rather firm.
medium culture
The average Medium Grown bid for the week was 1,192.50 rupees, compared to 1,159.49 rupees the previous week.
This week, the best of BOPF won while everyone else was firm.
In BOP1, Select best was lower by 100 rupees per kilogram. The lower end teas were firm.
Well-made teas from OP1 drop 200 rupees per kilogram. Best and below best enjoyed Rs 50 per kilogram. Lower end teas were firm.
While all the best types of the OP1 increased by 50 rupees per kilogram. The poorest categories have decreased by the same margin.
OP/OPA in general has decreased from 50 to 100 rupees per kilogram.
In the PEKOE/PEKOE1 – Select the best shed 100 rupees per kilogram while all others dropped 50 rupees per kilogram.
FBOP’s Select best drop 200 rupees per kg. Best was firm. Below better moved upwards of 50 rupees per kg.
The best choice of FBOP1 is lower by 150 rupees per kilogram while all the others are more expensive by 50 rupees per kilogram.
CTC
High growth BP1 increased significantly while PF1 increased by 20 rupees per kilogram.
Mid-sized BP1s were more expensive by Rs 80 per kilogram and more while PF1s gained by Rs 50 per kilogram.
Low-growing BPIs were generally firm while PF1 gained Rs 50 per kilogram.
(Colombo/July 31, 2022)
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