Money Markets: Tea prices dip as Ramadhan slows auction

Farmers pick fresh tea leaves at a tea plantation in Kericho. The Ramadhan month has seen a reduction of activity at tea auction from buyers in key Muslim countries of Pakistan, Yemen and Egypt. FILE 

By GERALD ANDAE 

Reduced demand for tea caused by the Ramadhan season in major importing countries has caused a drop in prices, adding to volatility in the sector which is also affected by the political instability in Egypt.

The Kenya Tea Development Agency (KTDA) says auction prices have dropped to $2.61 per kilogramme (Sh224.45), reversing a gradual recovery from the sudden drop caused by the Egypt crisis.

Head of corporate affairs at KTDA, Charles Kimathi, said in an interview that tea prices at the Mombasa auction had risen to $2.72 per kg in the past two weeks, from $2.32 in the previous weeks following ousting of Egytian president Mohammed Morsy.

“The Ramadhan month has seen a reduction of activity at the auction from buyers in key Muslim countries of Pakistan, Yemen and Egypt” said Mr Kimathi. Mr Peter Kimanga, a tea trader at the auction and former chairman of the East Africa Tea Traders Association said besides the effect of Ramadhan, the Egypt crises and increase in volumes of tea has also depressed the price.

(Read: Military takeover in Egypt now hits Kenya tea exports)

Mr Kimanga noted that this year in May, there was an extra 67 million kilogrammes of green leaves compared to the same period last year.

However, he expressed optimism that the prices are likely to firm up starting next month, with the onset of the cold season which affects the tea bushes.

“We expect that the price will rise next month as the cold season sets in starting September,” said Mr Kimanga.

He added that the crisis in Egypt caused jitters at the auction as buyers who were unable to offload the tea at Egypt’s Alexandria Port reduced their purchases, further reducing demand, which caused a price drop at the auction.