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Sri Lankan tea prices stay buoyant

June 12, 2008 (LBO) – Sri Lankan tea prices remained strong for the third week running at this week's auctions in Colombo with firm demand from the Middle East and the Commonwealth of Independent States, brokers said.

The strong market for tea, along with rubber and palm oil, prompted investors on the Colombo bourse to buy into plantations stocks, sending up share prices.

But the tea market eased more than a month ago with the end of the western quality season.

Bigger volumes of lower quality teas reaching the auctions following rains and a shortage of tea bag paper had also contributed to the drop.

Improved leaf quality and renewed demand from tea bag manufacturers appear to be keeping the market for high grown teas buoyant.

Low grown teas, which are much in demand from the Middle East, also did well, bucking the usual trend of a downturn in demand in the summer months.

"The additional demand in the market and also product improvement seems to be keeping demand strong for high grown teas," said Anil Cooke, chief executive of brokers Asia Siyaka Commodities.

"Demand for low country teas was also strong despite this being the off-season. Generally, buying eases in the height of the s

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