Tea plantations grapple with low crop intakes

Friday, 23 November 2012 00:01 - - {{hitsCtrl.values.hits}}

Though prices have been higher Rs.26.90 per kg compared to last year, plantation companies have not been able to take full advantage of the situation as intakes have been below expectation, according to John Keells Ltd.

“Unfortunately the gain in prices this year has come at the expense of higher production cost. On the other hand those plantation companies with higher yields are in a better position to benefit from the improved prices,” the broking firm said in its weekly tea market report.

Following are excerpts:

All plantations are back in production after a short break on account of Diwali holidays. Since the resumption of work intakes have shown a slight improvement from all three elevations but nowhere near what it should be. The reason being that heavy rainfall in the weeks prior to Diwali had retarded growth.Some plantation districts particularly in the Galle District also experienced floods during this period. Reports from the Eastern sector which went through a prolonged drought with severe stress on the tea has recovered well and crop intakes appear to be on the rise.

The disappointing crop we are seeing now is an unusual situation as the last quarter of the year is generally a high cropping period resulting in much higher intakes.

With the November crop projection not looking too good, the country appears to be heading towards a slight shortfall in production in the current year.

Though prices have been higher Rs. 26.90 per kg compared to last year, plantation companies have not been able to take full advantage of the situation as intakes have been below expectation. Unfortunately the gain in prices this year has come at the expense of higher production cost. On the other hand those plantation companies with higher yields are in a better position to benefit from the improved prices.

Auctions

The 1.6 Mkgs of Ex Estate teas met with better demand. Best Western High Grown BOPs appreciated Rs.10 to Rs.15, whilst the below best and plainer types were firm to a little irregular. BOPFs on average appreciated Rs.10 to Rs.15. Nuwara Eliya BOPs were firm to a little dearer at the start, but declined as the sale progressed and concluded at last levels. BOPFs were Rs.10 to Rs.15 easier. Uva BOPs were irregularly lower, whilst BOPFs were firm to dearer. Best Low Grown CTC PF1s mostly maintained, whilst others appreciated Rs.10 to Rs.15. Brokens tended lower.

The 3.1 Mkgs of Low Growns that came under the hammer this week met with good demand. In the Leafy category, most grades on offer appreciated prices, despite a few select best categories that were neglected. In the Small Leaf category, FBOP, FF1 along with BOP/BOP.SPs advanced Rs. 10 to Rs. 20, however select best Tippy varieties were lower to last.