Strong Demand Fails to Lift Tea Prices at Mombasa Auction

There was a slight decline in average price and quantity of tea at Mombasa weekly auction, despite a strong demand from traders.

The price per kilo of tea was $3.12(Sh318.10) from $3.14(Sh320.1) recorded last week.

Quantity of tea traded dropped marginally from 5.64 million kilos to 5.62 kilos.

Tea prices at the auction have stabilised above above $3 (Sh305) per kilo for a straight seventh week, with farmers reaping from the strong dollar against the Kenyan shilling.

According to the East Africa Tea Trade Association, prices are better this year because of high demand for teas, against low supply.

“There is still a strong demand for the teas and the prices are expected to continue to stabilise,” said EATTA managing director Edward Mudibo.

This week’s price is 46 per cent higher compared to same time last year, where the average prices were $2.13 (Sh217).

During same period last year, tea traded higher volumes at the auction, suppressing the price.

The low volumes at the auction have been attributed to reduced rainfall which has caused decline in tea production.

Data from the Agriculture, Fisheries and Food Authority showed total output dropped by 26.9 per cent in the first quarter of the year.

The reduction in output has been tied to delayed rains during the first quarter of the year, a relief to the market which last year battled lower prices due to oversupply.

Last week’s Sh320 per kilo price is the highest half-year average price recorded in the last two years.

The highest price last year was $2.65(Sh270) while 2013’s peak was $3.09 (Sh315) recorded between January and mid July.

In March, Kenya Tea Development Agency projected the impact of improved prices as a result of the drought will be felt largely from July should the low rainfall persist.

“The weather has remained favorable for quality of tea. If all factors remain constant, we foresee continued high prices of above three dollars per kilo for the next four weeks,” said Mudibo.

Pakistan, Egypt, United Arab Emirates and UK continued to dominate the top markets for Kenyan tea according to EATTA.