Globally tea prices are at a low due to an oversupplied market with “significantly lower” average prices across all regions during the first six months of the year.
Record global tea production in 2018 is the biggest contributing factor. Through June, global black tea production rose 2% to 1152 million kg (mkg) compared to 1,128 mkg in January-July 2018, according to Rajesh Gupta, compiler of annual Global Tea Digest.
The Consultative Committee of Planters’ Associations (CCPA) notes that tea production in India increased from 1,207 million kilos in 2014 to 1,339 million kg in 2018.
During the first six months of the year, India produced 650 million kilos against 614 mkg in January-July 2018, marking a gain of 35 mkg or 5.8%, writes Gupta.
As a result, prices for India tea spanned a range from $1.93 per kilo to a record $1,040 per kilo (INR75,000) this summer for a Golden Butterfly tea grown at the Dikom Tea Estate near Dibrugarh. In 2014 the all-India price was $1.80 per kilos (INR130.90) and it remains under $2 on average. Tea from Assam averaged $2.17 per kilo (INR 156.4) in 2018.
Production through June is down 22 mkg or 8.35% in Kenya, the world’s largest exporter of black tea, the Mombasa auction counted unprecedented volumes from stock carried forward from last year. As a result, Kenyan prices have fallen by 17% compounded by concerns about quality.
Rwanda overshadowed Kenyan suppliers at the premium end of the market earning $5.50 per kilo (KSH550) compared to the same grade of Kenyan teas which sold for $4.28 per kilo. Kenya normally achieves the highest prices at auction but a combination of quality and availability in August drove prices down to between $1.25 and $1.37 per kilo.