Tea rebounds to Sh203 at weekly auction amid shrinking supply

The amount of tea withdrawn from sale at the auction fell 24 percent this week as price increase at the Mombasa auction saw buyers sell most of the commodity.

Data by East African Tea Traders Association indicates only tea worth Sh228.8 million was offloaded from the auction against that valued at Sh302.3 million last week. In trading held on Tuesday, a kilogramme of tea on average went up to Sh203, up from Sh193 realised last week.

Tea prices have been falling in the last two months but have rebounded in the last two sales as volumes offered started coming down because of the ongoing drought.

The volumes offered for sale this week dropped from 7.275 million kilos to 7.2 million as adverse effects of droughts hit tea farmers and factories.

Over 40,000 tea factory workers have been forced to go on advance leave as production went down by half.

Kenya Tea Growers Association (KTGA) chief executive officer Apollo Kiarii says the harsh climatic conditions have forced factories to operate three to four days a week, significantly cutting down operations.

He said it will take another six to eight weeks for the crop to recover if the rains come, and additional cost of replanting and infilling the fields for the dried-up bushes means the industry performance for the year 2019 will be poor than any other time. The Tea Directorate had forecast the volumes will this year drop to 416 million kilos from a high of 474 million kilos last year.