Market update

Adverse weather drives Sri Lankan tea prices higher

By RJ Whitehead

- Last updated on GMT

© iStock
© iStock

Related tags: Sri lanka, Supply and demand, Tea

Prices for Sri Lankan high-grown, fanning-grade tea peaked in early February and remain up on 2016 by 32%. 

This spike was prompted by overall tea production on the island last year, which saw pickings fall to their lowest level in seven years, at just under 300m kg—down 11% year on year. At the same time, exports were down to 288m kg, the lowest in 14 years. 

Tea

According to Mintec, the commodities analyst, this was mainly due to erratic weather conditions for most of the year, as well as poor fertiliser use and a government ban on pesticides. 

Last year’s supply situation was further complicated by trade union protests, as plantation workers railed over increased daily workloads and demanding higher wages. 

Despite higher prices and reduced supplies, global demand for Sri Lankan tea has remained firm, with Russia, Iran, Iraq and Turkey the biggest importers. 

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