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Tea price hits 5-year low amid falling demand
A tea plantation in western Uganda where the crop is widely grown. PHOTO | FILE
What you need to know:
- The price of tea has been fluctuating at the auction even as the volumes offered for trading has been constantly declining in the last five sales.
Tea prices at the Mombasa auction fell to a five-year low in the latest weekly sale as the value of the commodity continues to deteriorate leading to a record withdrawal of product during trading.
A market report from the East African Tea Traders Association indicates the price of the beverage declined to Shs5,958 last week, down from Shs6,156 that was realised in the previous sale.
The low price saw 20 per cent of tea offered for sale withdrawn from the auction floor as traders chose to wait and see if the prices will improve in the next trading session.
The Mombasa Tea Auction is a bulky tea selling point that draws with 11 member countries within eastern Africa, including Uganda.
The price of tea has been fluctuating since the year began, worsening over a month due to lower than expected demand.
According to the East African Tea Traders Association report out of the 13 million kilogrammes available for sale, 10.3 million were sold while 20 per cent remained unsold.
The decline in price comes despite the volumes offered for sale dropping by 99,499 kilogrammes from the previous sale.
The low prices saw 2.7 million kilogrammes taken off the trading floor and will be re-offered in the next auction.
The price of tea has been fluctuating at the auction even as the volumes offered for trading has been constantly declining in the last five sales.
According to East African Tea Traders Association, low demand of the beverage has been a contributing factor to depressed earnings.
“Demand has also been affected to some extent by reduced consumer purchasing power due to the effect of the global economic recession that is perpetuated by Covid-19 as well as the devaluation of some foreign currencies against the dollar,” said the East African Tea Traders Association.
Prices have largely remained slightly above one dollar, only touching a two dollar mark during sale 10 that was held in March this year.
