Kenyan tea prices have hit record highs at the past few week’s auctions in Mombasa on drought fears ahead of Ramadan, when trading in Islamic countries falls sharply and consumption rises but improved quality and overall tight world supply also contributed.
This demand is being driven by Middle East countries. And what’s more most of the tea offered for auction is actually being sold off at these high prices.
The average price for Best BP1s hit $4.03 per kg, up from a previous high of $3.97 reached in August. Tea offered at the weekly auction in Mombasa has fetched higher prices this year with buyers stocking up as drought in the world’s biggest exporter of black tea hit production. These prices are almost reaching the records of 1996 and 1997.
This might as well be reflected in the next financial reporting period of the listed tea companies. Which include Williamson Tea, Sasini Tea & Coffee, Kapchorua Tea and Limuru Tea among others.
Reason for the short-term optimism:
- The Shilling is still weak against the US dollar at about Kes 75-78 to the $.
- Tea prices at their highest in almost 10 years
- Increased Govt. investment in the tea industry.
More on this from Nation Media and Bloomberg.
Disclaimer: These are our personal views and you are strongly advised to seek professional advise before making any investment decisions. Riba Capital cannot be held liable or responsible for any action taken on the basis of this commentary. We take no responsibility for the accuracy of the data or commentary provided here, neither should it be used as the primary or sole source of information for financial or investment decisions.
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