Tea sector gains relief with floating of rupee

Sri Lanka’s tea sector has gained some relief with the rupee hitting an all-time low, due to the Central Bank deciding to float the currency.

Tea brokers said the floating of the currency led to a more formal conversion rate that helped rupee tea prices to soar at the Colombo Tea Auctions. However, the full benefit of the currency depreciation is perhaps not reflective, owing to the sharp devaluation of the Russian ruble following the Russia-Ukraine conflict, Forbes & Walker Tea Brokers said in its latest tea auction report.

Tea sector gains relief with floating of rupee

“Price gains were imminent in the large leaf sector, where teas are picked up for a wider cross-section of markets. High and medium prices and teas particularly at the lower end of the market too recorded fair price gains for most teas on offer,” the tea brokerage said.

This week a total of 5.3 Mnkg came under the hammer, recording a marginal increase over last week’s 5.2 Mnkgs. Ex-Estate offerings were fairly similar to last and totalled 0.8 Mnkgs. There was improved demand.

Best Western – Select seasonal BOP invoices appreciated substantially following special inquiry, whilst the others were irregular. Corresponding BOPFs had a few select invoices gaining substantially following special inquiry. Others were firm and up to Rs.20 per kg dearer.

In the Below Best category, BOPs were irregular, whilst the corresponding BOPFs gained Rs.20-30 per kg. Plainer BOPs were firm and up to Rs.20 per kg dearer. High and Medium Grown CTC teas were firm and Rs.20-30 per kg dearer, in most instances, whilst the Low Grown types gained Rs.20 per kg on average.

Off Grades and Dust varieties appreciated by an average Rs.20-30 per kg and Rs.20 per kg, respectively. Low Growns comprised 2.1 Mnkgs in the leafy/semi leafy and tippy catalogues.

There was improved demand, which continued to be stronger towards the closure of the sale, Forbes & Walker Tea Brokers said.

In the leafy catalogues, Select Best OP1s together with the clean Below Best varieties appreciated substantially and gained further towards the closure. Teas at the lower end too gained to a lesser extent.