African tea prices at the auction in Kenya, the world’s biggest exporter of the black variety, rose to a more than two-year high last week and may climb further as hailstorms damage the crop, the main trading organization said.
The average price increased to $2.77 a kilogram (2.2 pounds) at last week’s sale in the port city of Mombasa, the East African Tea Traders Association said in a statement. That’s the highest since March 2013. The auction is the world’s largest for black tea leaves after the sale in Colombo, the EATTA said on its website.
“There is every indication for an upward trend because of the low supply,” Managing Director Edward Mudibo said in an interview at his office in Mombasa Thursday. “The rains in April came with hailstorms, which destroyed leaves in Kericho and Nandi, worsening the damage that had already been caused by the dry spell. The bush needs at least five weeks to heal before producing fresh leaves,” he said.
The hail follows a dry spell that curbed supplies earlier this year. The wet season -- which usually runs March through May -- is crucial for agricultural producers in a country that largely relies on rain. While most of the volumes traded at the Mombasa auction are from the nation, there is also produce from Malawi, Rwanda, Tanzania and Uganda.
Last week, 5.3 million kilograms were offered compared with 8 million kilograms a year earlier and 8.1 million kilograms in the first auction of 2015, data from Tea Brokers East Africa show.
Kenya produced 24.3 metric tons of tea in February, 28 per cent less than a year earlier, the National Bureau of Statistics said 6 May.
While forecasts indicate more rain in May, showers will be insufficient to improve production significantly, according to Lerionka Tiampati, chief executive officer of the Kenya Tea Development Agency, which runs 66 factories catering for more than 560,000 small-scale producers.
“Even with the onset of the rains, tea bushes will take much longer to recover,” he said in an e-mailed response to questions 7 May.
The delay in improvement will support higher prices, Tom Muchura, director of African Tea Brokers, said by phone.
“There is less tea because we have just got over the dry season and because of the high interest, the prices have gone up,” he said. “The situation will continue for some time until we get full volumes coming from the impact of rains.”
Bloomberg News, edited by ESM
