Dubai volumes of tea cool as supplies fall

Sipping steaming cups of tea is a daily pastime for cultures from East to West, but last year the commodity was scarcer than usual. A global shortage of tea led to a steep drop in the Dubai tea trade. The overall volume through Dubai fell by 24 per cent last year to 112.3 million kg, from 148.6 million kg in 2008. Ian Hart, the editor of the UK-based agricultural commodities publication, The Public Ledger, said the drop in Dubai reflected the scarce amount of tea worldwide.

"Last year, India, Kenya and Sri Lanka, which count for the vast majority of exports of tea in the world, had poor production through a combination of things, mostly poor weather in those regions, but also because of some strikes in Sri Lanka," he said. Prices rose last year as buyers scrambled for the available stock, analysts said. There are few avenues to invest in tea outside of publicly listed companies that make the beverage, such as Unilever, which owns the Lipton tea brand. The Dubai Tea Trading Centre (DTTC) has said it is considering launching tea futures, but has not yet set a date for launch.

A reading of the tea leaves for the near future hints at more lush crops ahead, as rain begins to fall across the big tea-growing regions. The cost of tea is still historically high, but has eased slightly, Mr Hart said. But until more tea crops are harvested this year, stocks would remain low. This meant tea prices would be fairly volatile, he said, which would create an opportunity for investors and traders who were able to anticipate the moves.

"Volatility can be a good thing," he said. "It doesn't matter if the price is going up or down, you can make money out of the change in the market." Mr Hart said that as the DTTC added more services, such as a new Dh13 million envelope and tag printing facility, more companies would seek to trade the commodity through Dubai. @Email:aligaya@thenational.ae