Tea Prices Slightly Gains Even As Demand Remains Low

Tea prices at the weekly Mombasa auction have this week recorded a marginal gain, despite low demand from the key buyers.

A kilo of the beverage fetched USD2.32(280.49 shillings) up from USD2.27(274.80 shillings) fetched last week. About 7.3 million kilos of the leaf were sold against the 12.1 million kilos offered. In addition, the total volumes traded at the auction decreased by 553,505 kilos compared to the previous week.

Pakistan Packers, Bazaar, Yemen, and other Middle Eastern countries lent strong support with Sudan, Kazakhstan, and other CIS states showing improved interest.

“Russia, Iran, and Local Packers maintained support. There was more interest from Somalia at the lower end of the market.” Said East African Tea Trade Association (EATA) managing director Edward Mudibo.

Tea is among Kenya’s leading exports and has been hailed for earning the country high revenue alongside the horticulture sector. Last year, tea accounted for about 19.6 percent of the total domestic exports valued at 130.9 billion shillings.

Pakistan maintains as the top buyer of Kenya’s tea taking up 38 percent of the total weekly sales at the Mombasa Tea Auction. In addition, the country buys an average of up to 70 million kilograms of Kenyan tea annually.

Pakistan has since June cut its tea consumption citing financial uncertainties. The country’s foreign exchange reserves dropped from around $16 billion (1.9 trillion shillings) in February, to less than $10 billion (1.2 trillion shillings) in the first week of June making it harder for the country to cover the cost of two months of all its imports.

The South Asian country has also witnessed extreme weather conditions since the start of the year, with recent floods leaving a third of the country underwater and leading to a humanitarian crisis.

The outbreak of the Russia-Ukraine war heavily affected exports of Kenya’s tea to western nations, due to the blockage of shipping routes. The Tea Board of Kenya confirmed that there was a huge decline in Russia’s earnings in March, with the volumes sinking to 686,072 from 2.6 million kilos sold in a similar period last year.

Despite the prevailing low demand, this year Kenyan tea has managed to remain above two dollars per kilo as compared to last year when the prices ranged between $1.80 (215.28 shillings) and $1.90 (227.24 shillings).

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