African Tea Prices Plunge at Auction as Crunch Deters Buyers

By Antony Sguazzin and Ron Derby

Nov. 14 (Bloomberg) -- African tea prices plunged the most since March 2006 as the global financial crisis deterred buyers and rainfall in Kenya boosted supplies.

The average tea price at a weekly auction in Mombasa, Kenya dropped 12 percent to $1.79 a kilogram (2.2 pounds) at the Nov. 10 and 11 sales, from $2.04 a week earlier, Mombasa-based Africa Tea Brokers Ltd., the founding broker of the auctions, said in an e-mailed statement today.

The weekly auctions sell tea from most African producers excluding South Africa and countries in west Africa. Buyers range from Egypt and Pakistan to Russia and the U.K.

``This is in response to the global credit crunch,'' David Mwashumbe, a spokesman for Africa Tea, said in an interview from Mombasa today. ``The buying countries are saying that tea is no longer a priority, they are cash strapped.''

Heavy rains across Kenya, the world's biggest exporter of black tea, are also boosting supplies of the leaves with some consignments not being bought, he said.

Of the 7.63 million kilograms on offer this week 5.67 million kilograms were sold, Africa Tea said. The amount of tea on offer will rise to 7.71 million kilograms next week and 8.75 million kilograms the week after.

Tea is also sold at auctions in Colombo, Sri Lanka, and at sales in Malawi, India and Indonesia.

To contact the reporter on this story: Ron Derby in Johannesburg at rderby1@bloomberg.net To contact the reporter on this story: Antony Sguazzin in Johannesburg at asguazzin@bloomberg.net