Tea price retreats on higher supply at Mombasa auction

TAGS: | UPDATETIME: 2021-12-21

Source: Business Daily By GERALD ANDAE

The price of tea at the Mombasa auction retreated in the second week’s sale this month, reversing some of the gains that had driven the price of the commodity to a five-year high.

The East African Tea Traders Association (Eatta) says the average price for a kilo of the beverage declined to Sh270 in the latest auction, down from Sh276 in the previous sale.

According to the Tea Directorate, the price decline was due to an increase in the supply of the commodity in the market.

The decline in price saw traders withdraw 19 percent of the total teas offered for sale from the trading floor last week.

The price fell despite demand, which had driven the gains recorded in previous auctions, remaining healthy.

“There was a good general demand for the 177,590 packages (11.6 million kilos) available for sale, with 143,386 packages (9.5 million kilos) being sold. Some 19.3 percent of the packages remained unsold,” said Eatta.

The average price of the beverage in recent weeks has also been boosted by the move by the Agriculture ministry to set a minimum price of $2.43 from August, after the cost of tea hit a decade low of Sh186.

Multinationals also followed suit and said they would set minimum prices for their tea, to protect their margins.

In the export market this year, tea earnings have been lower than last year, attributed to higher production that has hurt prices.

The Central Bank of Kenya data released last week shows that tea exports earned the countrySh109.4 billion in the 10 months to October, a decline of 6.3 percent compared to the Sh116.7 billion in the corresponding period last year.

Tea is the only commodity among Kenya’s main agriculture exports to record a decline in value this year and now risks falling behind horticulture whose earnings went up by 23.8 percent to Sh108.5 billion.