Ceylon tea prices are likely to remain buoyant given high crude oil prices that could support demand in key Middle Eastern markets and the depreciation of the rupee against the dollar, John Keells Stock Brokers said.

Tea export revenue in the nine months to September this year were up over 12 percent to $510 million compared to the same period last year, they said.

"The increase was mainly on account of higher tea prices and a 7.3 percent growth in export volumes," they said.

Increased demand from key buyers such as the Commonwealth of Independent States (CIS) and Russia, as well as Iran, Iraq, Saudi Arabia and the United Arab Emirates have kept prices at attractive levels, they said.

"The gradual increase in world oil prices since August 1999 has also been an impetus towards Middle Eastern and Russian buying,"the brokers said.

This was despite world tea production being ahead of last year by about 48 million kgs.

Russia and the CIS, the main markets for Ceylon tea, have bought 43 million kgs up to September, almost 18 percent more than the year before.

Tea exports to Iraq grew by 73 percent to seven million kgs and to Egypt, once the biggest buyer of Ceylon tea, by 31 percent to nine million kgs.

High oil prices and the weakening rupee "hold promise" for tea prices in the coming months, John Keells Stock Brokers said.

Daily News 28.11.00

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