Wednesday Dec 25, 2024
Wednesday Dec 25, 2024
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January 2014 recorded the highest ever low grown combine average of Rs. 543.67. The high grown combine average of Rs. 452.75 and medium grown combine average of Rs. 452.37 which is the highest for the respective elevations was recorded in January 2014. The marginal depreciation of rupee in 2014 as against the year 2013 was a contributing factor for the higher NSA. The weighted average middle rate for the rupee against the dollar for the year 2013 stood at 128.81 vis-à-vis 130.33 in 2014.
Sri Lanka tea production to end November 2014 (available data) up to the time of compiling stood at 313.82 million kilos compared to 309.77 million kilos for the same period in 2013 (+4.05 million kilos). The High and Low Grown reported an increase from the year 2013 whilst the Medium Grown shows a decline to the said period. Low Grown shows the highest increase with 4.67 million kilos than the year 2013 same period.
The total Sri Lanka tea production for the year 2014 is likely to be around four million kilos higher than the total production in 2013. The total 
Sri Lanka tea production up to end November 2014 totalled 313.82 m/kg, hence if December 2014 production surpasses 27 m/kg the year 2014 production is likely to surpass 340.03 m/kg in 2013 which is the highest production figure recorded so far.
Sri Lanka tea exports up to November 2014, (available data) including re-exports with imported tea amounts to 297.59 million kilos showing an increase of 6.93 million kilos compared to the same period in 2013. The FOB average price per kilo of Rs. 652.84 recorded up to November 2014 shows an increase of Rs. 33.45 as against the same period in 2013.
In dollar terms FOB value per kilo stood at $ 5 in 2014 vis-à-vis $ 4.80 in 2013. Cumulative export earnings up to end November 2014 amounted to Rs. 194.27 billion showing a gain of Rs. 14.25 billion as against the same period last year. It is likely that the cumulative export earnings in 2014 would surpass year 2013 January/December figure of Rs. 199.44 billion.
Russia continues as the largest export destination from Sri Lanka followed by Turkey and Iran. A notable feature in the exports is Turkey increasing imports of tea from Sri Lanka by 11.18 m/kg up to November 2014 vis-à-vis 2013 thus surpassing Iran of (-8.63 m/kg) YOY to record as the second biggest export destination from Sri Lanka. Exports to Libya have shown a considerable increase whilst exports to Syria has decreased -7.72 m/kg up to end November. Export figures indicate that UAE is fast turning into a tea trading hub.
2015 – Prospect
Tea production in Sri Lanka during the first quarter in 2015 is expected to be low due to erratic weather conditions. There should be reasonable demand for the High Growns with the western quality season in the first quarter. The Orthodox Low Growns are envisaged to be of lower demand in the first quarter with an anticipated average between Rs. 450-460 per kilo.
There would be a good demand for the below best types of teas in the first quarter due to decline in purchasing power in some of our biggest export destinations namely Russia and the Middle Eastern countries due to sanctions, decline in oil prices, Ruble crisis, etc.
The negatives remain, particularly in regard to ‘Ceylon Tea’, is the uncertainty in the Middle East Region which is one of the largest market of our teas. The Ruble crisis, anticipated economic contraction and the recession in Russia in 2015 would be a major blow to the Sri Lanka tea industry.
The decline of oil prices in the second half of 2014 (from $ 110-115 per barrel in the beginning of the year and currently $ 60 per barrel ) has severely affected two of our biggest export destinations namely Russia and Iran whose main income earners are exports of crude oil and natural gas.
The oil prices are not expected to move up at least till the second half of 2015 due to higher oil production (addition of shale oil from USA to the market) and due to the lower economic growth in countries with a high consumption of oil namely China and European union. Therefore, it is imperative at this juncture that Sri Lanka looks for new markets in order to export teas rather than being solely dependent on Russia and Middle Eastern counties which are already in a crisis.
The importation of other origin teas to Sri Lanka for re-exports as a hub should be re-examined in order to capture markets with lower import values.
The rising cost of production on the plantations and the Small Holder Tea Factories could hinder the growth of the tea producing sector. Insufficient supply of fertiliser and lack of re-planting could affect the plantations sector on the long term. The substantial decline in price of crude oil globally as well as the lower interest rates which is prevailing now would be a temporary relief to the plantation sector.
