Kenyan tea prices hit record, drought fears support

NAIROBI (Reuters) - Kenyan tea prices maintained their upward trend with best Broken Pekoe Ones (BP1s) hitting a record at Tuesday's auction for the third week running, brokers said.

The average price for Best BP1s hit $4.31 per kg, up from the previous record of $4.20 per kg set at the last auction a week ago and $4.16 per kg the week before that.

Tea offered at the weekly Mombasa auction has fetched higher prices this year due to buyers stocking up over fears drought in the world's biggest exporter of black tea will hit production.

News of expected above-normal rainfall in the rainy season beginning in October failed to dampen prices for the best teas on offer, although prices for lower quality teas generally fell.

"There was less general demand for the 75,177 packages (4.75 million kg) on offer at irregularly easier rates closely following quality with more teas remaining unsold (26.26 percent)," Africa Tea Brokers (ATB) said in a market report.

Best BP1s fetched $4.38-$4.24 per kg up from $4.28-$4.11 per kg at the last sale, while top PF1s changed hands at between $3.88-$3.78 per kg, down from $4.18-$3.98 per kg last week.

"Kazakhstan (CIS) showed more support with the UK more active but selective, while Yemen and other Middle Eastern countries were active but at lower levels," ATB said.

"There was less interest from Egyptian Packers, Pakistan Packers, Afghanistan, Sudan and Russia. Bazaar and (the) Egyptian Government Sector did not operate. Somalia was less active at the lower end of the market," it said.

The Tea Board of Kenya anticipated a drop of about 20 million kg in green leaf production this year to 325 million kg, due to poor rains.

Meteorologists, however, forecast the next rainy season will provide above-average showers, which is good for Kenyan farmers who have suffered four consecutive seasons of low rainfall.