NO. 40

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                       Market Report
                       SALE NO. 40 - OF 13th / 14th OCTOBER, 2009

One of the key imponderables facing the Tea Industry this year is the inability to account for the
negative crop harvested so far this year. It is true that the year commenced with the fallout of the
global economic meltdown, which perhaps put on hold some agricultural practices, which would
have otherwise gone ahead. The year commenced with drought conditions which severely restricted
crop and pushed up the NSA’s of Tea Factories to unimaginable levels.

The second and third quarters this year was favorable to the Producers. Fertilizer applications have
been administered following rains, but there has still not been a significant impact on crop. October
has started with unusually heavy rainfall in the upcountry in particular, which is once again not
conducive to growth. Many a Planter is trying to figure out a cogent reason for the sharp drop in
crop so far this year, but have not come up with a convincing answer. Is it the effects of Global
warming that has changed the weather patterns? One wonders.

The International Tea Buyers plan out their buying strategies well in advance, as their sourcing at
most times is from several producing countries. As such it is important for Sri Lanka to be able to
provide the world with a supply line in excess of 300 MKGS, which has been achieved during the
past years. On no account must we get ourselves in to a situation where the Tea Production falls
short of the minimum target of 300 MKGS, as it will erode buyer confidence in Colombo being able
to supply their full requirements.

Quantity: This week‟s auction comprised of 10,521 lots with a total quantity of 6,283,320 kgs.
          The catalogue-wise breakdown was as follows:-
                                           LOTS       QUANTITY (KG)

       Low Grown – Leafy                   3,689           1,884,351
       Tippy / Small Leaf                  2,616           1,714,355
       Main Sale – High & Medium           1,189             604,797
       Off Grades                          1,489             888,757
       Dusts                                 358             341,275
       Supplementary                         445              78,113
       Ex-Estate                             735             771,672
       Total                              10,521          6,283,320
                                          =====           ========

Quality:       Low Growns were unchanged. Ex-Estate teas were preferable to last.

Demand:        Less demand for Low Growns. There was strong and widespread interest for Ex-Estate
                                                                                      -/Cont‟d… (P2)

                                                                       Quotations (Rs/kg)
LEAFY                                                                  Best           Below       Others

BOP1 Teas in the best category declined Rs.10/- and at times           480-520       370-400      250-275
     more. Balance tended irregular and was mostly lower.
     Teas at the bottom on average lost Rs.10-20/- per kg.

OP1    Select best invoices barely maintained last levels.             460-550       350- 375     230-260
       Balance tended irregular. Below best types on average
       lost Rs.10-20/-. Poorer teas too declined by a similar
       margin whilst the very poor invoices were difficult of sale.

OP     Best on offer declined Rs.10-20/-. Balance too was lower         440-490      330-360      230-260
       by a similar margin. Teas at the bottom declined Rs.20/- per kg.

OPA    A few select best invoices maintained. Balance declined         440-485       340-360      240-270
       Rs.10-20/- and at times more. Below best types too followed
       a similar trend. Teas at the bottom declined Rs.20/- and more
       with some invoices being difficult of sale.

PEK    Well made shotty invoices were lower by Rs.10-20/-.             500-700       350-375      275-290
       Balance too on average declined Rs.20/- and at times
       more. Below best shotty invoices declined further.
       Teas at the bottom lost Rs.20/- and more.

TIPPY / SMALL LEAF                                                      Best         Below        Others
BOP/BOPS       Teas in the best category continued to ease              470-560      410-415      310-390
               and prices fell Rs.5-10/- and at times more, whilst
               below best eased Rs.20-30/-.

BOPF           Were easier by Rs.20-30/-.                              365-475       320-350      290-315

BOPFS          Were easier by Rs.15-20/-.                              400-485       350-400      290-345

FBOP / FBOP1 Teas in the best category eased Rs.20-25/-        465-650               360-440      350-390
           and more, and at the times were unsalable, whilst below
           best eased Rs.20-30/-. Teas at the bottom were firm.

FBOPF1         Except a few select best, balance eased Rs.15/-.        485-1080      415-440      370-380

FBOPF          Teas in the best category sold around last               575-840      430-480      280-350
               levels, whilst below best sorts were irregular.

FBOPF SP / EXSP Best on offer declined by Rs.20-40/-                   1800-2900    800-1700    300-800
            whilst the others were firm on last levels.

                                                                                         -/Cont‟d… (P3)


BOP          Coloury Westerns in the “best” and “below best” categories gained Rs.10-20/-, and
             sometimes more for selected invoices. Plainer teas advanced Rs.15-20/- per kg. Nuwara
             Eliyas appreciated Rs.10-25/-, whilst Uva/Uda Pussellawa‟s gained Rs.10-20/-.

BOPF         Best Westerns were fully firm whilst coloury below best teas and cleaner leaf plain
             liquoring teas gained Rs.5-10/- per kg. Nuwara Eliyas advanced Rs.10-20/-. Uda
             Pussellawas gained Rs.15-20/- whilst Uva‟s also followed a similar trend.

       Quotations (Rs./Kg)                           BOP                         BOPF
                                           This Week      Last Week      This Week     Last Week
       Best Westerns                       450-500         440-495        450-465       445-480
       Below Best Westerns                 435-445         420-435        435-445       415-440
       Plainer Westerns                    420-430         400-415        425-430       400-410
       Nuwara Eliyas                       370-415         375-390        440-450       420-450
       Uda Pussellawas                     380-450         375-425        420-450       375-425
       Uvas                                415-500         360-480        415-460       380-445

BOP          Select best teas were fully firm. Others gained up to Rs.10/-.
BOPF         Neater teas advanced up to Rs.10/- per kg.

       Quotations (Rs./Kg)                    BOP                             BOPF
                                    This Week      Last Week      This Week     Last Week
                                     490-540        455-550        400-435       380-435

OFF GRADES Well made cleaner BM‟s eased Rs.10/-. Below best types appreciated by Rs.20-25/-
         whilst poorer sorts gained by Rs.20-30/-. Well made cleaner BOP1A‟s maintained last
         levels. Below best types and the poorer sorts advanced by Rs.10/-. Liquoring
         FNGS/FNGS1‟s advanced by Rs.15/-.

DUST         Select best liquoring invoices maintained last levels. Below best invoices declined by
             Rs.10/- whilst poorer sorts gained Rs.5-10/- and at times more. Select best PD‟s maintained
             last levels. Best Low Growns declined by Rs.10-20/- and at times more whilst poorer sorts
             gained Rs.20/-.


PF1          High Growns gained Rs.10-20/- whilst Mediums which commenced Rs.5/- dearer,
             appreciated a further Rs.5-10/- by the close. Select best Low Growns were firm, but others
             were barely steady.
BP1          High and Medium descriptions gained Rs.10-25/- whilst Low Growns advanced

Quotations (Rs./Kg)                           PF1                          BP1
                                  This Week      Last Week        This Week Last Week
             CTC High              390-445        375-410          350-455     340-380
             Medium                370-440        360-430          320-410     365-380
             Low Grown             400-500        390-490          420-450     350-430
                                                                                     -/ Cont‟d… (P4)
                                 TOP PRICES – (RS/KGS) – SALE OF 13th / 14th OCTOBER, 2009

    Western High                                           Uva High                                     Low Growns
                                                           Bandara Eliya       BOPF /SP       445/-     Stream Line         BOP       560/-
    Mattakelle             BOP       500/-
                                                           Kelliebedde         BOP            445/-     Lumbini             BOP       550/-
    Mattakelle/Brunswick BOPF/ BOPFSP 465/-
                                                           Gorden/Oodoowerre PEK/PEK1         475/-     * Hidellana         BOP       540/-
    Glenloch               PEK/PEK1     495/-
                                                           Craig               FBOP/FBOP1 480/-         *New JSP            BOP       540/-
    Inverness              FBOP/FBOP1 465/-
                                                           Craig               FBOPF/FF1      495/-     Renukanda           BOP SP    540/-
    Diyaella               FBOPF/FF1 455/-
                                                           Craig               OP1            435/-     * Andaradeniya Super BOPSP 530/-
    Nadoototem             OP1          355/-
                                                           Sarnia Plaiderie    BOP1          480/-      Kirimetiya          BOPF      475/-
    Bambarakelle           OP1          355/-
                                                           Batawatte           OP/OPA         435/-     * Geekiyanahena     BOPF SP 485/-
     St. Andrews/Batalgalla BOP1        440/-
                                                                                                        Ceciliyan/Kelani    BOP1      520/-
    Diyaella               OP/OPA       405/-
                                                                                                        New Vithanakande    BOP1      520/-
    Western Medium                                         Uva Medium
                                                                                                        Nilvin View Super   BOP1      510/-
    Doombagastalawa/Rilagala BOPSP            510/-        Telbedde            BOP             470/-
                                                                                                        *Andaradeniya       BOP1      500/-
    Kenilworth             BOP               540/-         Halpewatte Uva      BOP SP           500/-
                                                                                                         Sithaka            OP1       550/-
    Vellai Oya             BOPF/ BOPFSP 435/-              El Teb              BOPF/ BOPFSP 460/-
                                                                                                        Wewelkandura        PEK       700/-
    Craighead/Imboopitiya PEK/PEK1           485/-         Ambagasdowa         PEK/PEK1        475/-
                                                                                                        Nawalakanda         PEK1      630/-
    Imboolpitiya           FBOP/FBOP1        500/-         Sarnia Plaiderie    FBOP/FBOP1      500/-
                                                                                                        Sithaka             OP        490/-
    Imboolpitiya           FBOP/FBOP1        495/-         Meddakanda          FBOPF/FF1        490/-
                                                                                                        * Bogoda Group      OPA       485/-
    * Ancoombra            FBOP/FBOP1 455/-                Dickwella           OP1             490/-
                                                                                                        Sihara              OPA       485/-
    * Orange Field         FBOP/FBOP1 455/-                Dickwella           BOP1            475/-
                                                                                                        Morawakkorale       FBOP      610/-
    Orange Field           FBOPF/FF1         510/-         Pinnawela           BOP1            440/-
                                                                                                        * Uruwala           FBOP1     650/-
    Craighead              FBOPF/FF1         510/-         * Halpewatte Uva    BOP1           435/-
                                                                                                        Makandura           FBOPF     840/-
    * New Dartry           OP1               430/-         Shawlands           OP/OPA          455/-
                                                                                                        Galahitiya          FF1       1080/-
    * Uplands/Sanrose      OP1               420/-
                                                                                                        Sirimewana          FBOPF SP 1250/-
    * Hatale               OP1               400/-         Uda Pussellawa                               *Ganganee           FF EX SP/1 1300/-
    Imboolpitiya           BOP1              500/-         Liddesdale          BOP             450/-
    Oonoogaloya            OP/OPA            395/-         Liddesdale          BOPF/ BOPFSP 450/-
    Nuwara Eliya                                           Ragalla             BOPF            450/-
                                                                                                        Wewelkandura        FBOP      1160/-
    Lovers Leap            BOP           415/-             Liddlesdale         PEK/PEK1       440/-
                                                                                                        New Falcon Lanka    FBOP1     1070/-
    Lovers Leap/Mahagastotte BOP         450/-
                                                                                                        Bandarahena         FBOP1     680/-
    Lovers Leap            PEK/PEK1     580/-
                                                                                                        * New Laksanakda FBOP1        640/-
                                                                                                        Mulatiyana Hills    FBOPF    1750/-
                                                                                                        * Geekiyanahena     FBOPF     1430/-
                                                                                                        Ehalakanda          FBOPF1 3400/-
                                                                                                        Mulatiyana Hills    FF SP     2010/-
                                                                                                        New Vithanakanda     FFEX SP/EXSP1 2900/-

                                                CTC TEAS
               HIGH                             MEDIUM                               LOW

*Florence PF1 445/-                  Delta PF1 440/-                     Kalubowitiyana PF1 500/-

                                     * Carolina PF1        435/-         Kalubowitiyana BP1 450/-

 Florence BP1         455/- ++      Duckwari PF1 435/-

                                    Carolina BP1 410/-
*Florence       PD     435/-        Coldstream BP1 410/-                 Hingalgoda PD     435/-

                                     Rothschild PD 445/-

* Sold by Lanka Commodity Brokers Ltd. ++ All Time Record
                                                                                                                            -/Cont‟d … (P5)


                           Sale No. 39 of 7th October, 2009
                                             2009                                    2008
                            Weekly          Month         Year              Weekly       Year
                                            To-date       To-date                       To-date
Uva High Grown              366.07          365.38        287.04            234.85      267.02

Western High Grown          409.74          409.72        304.46            293.35      287.48

High Grown                  396.54          396.26        298.89            272.44      280.69

Uva Medium                  393.21          392.28        318.89            257.29      291.38

Western Medium              368.42          367.91        296.23            260.07      277.62

Medium Grown                378.17          377.47        305.28            258.86      283.33

Low Grown                   414.69          414.65        387.22            334.25      355.60

Total                       406.99          406.71        355.37            308.19      326.50

                           =====            =====         =====             =====       =====


                       DETAILS OF TEAS AWAITING SALE
                            Sale of 20th / 21st Oct.’09       Sale of 27th / 28th Oct.’09

                            Lots           Qty (Kgs)                Lots             Qty (Kgs)

 Low Grown Leafy             3,621          1,853,033               3,473            1,728,923

 Low Grown Tippy             2,606          1,709,319               2,470            1,574,996

 High & Medium               1,323            678,711               1,164             599,885

 Off Grades                  1,541            907,918               1,368             820,308

 Dusts                         369            362,530                309              305,765

 Supplementary                 446               78,282              516               90,592

 Ex-Estate                     762            791,544                706              738,542

 Total                      10,668           6,381,337          10,006            5,859,011

                            =====          =========               =====        ========

                                                                      -/Cont‟d … (P6)

                                 FUTURE CLOSING CATALOGUES

Sale No. 43 of 03rd / 04th November, 2009
The Main Sale catalogue is scheduled to close on 16th October, 2009, whilst the Ex- Estate catalogue will
close on 15th October, 2009.

Sale No. 44 of 10th / 11th November, 2009
The Main Sale catalogue is scheduled to close on 23rd October, 2009, whilst the Ex- Estate catalogue will
close on 22nd October, 2009.

                                    BROKERS ORDER OF SALE
 Auction of 20th October, 2009                      Auction of 21st October, 2009
        Main Sale                                          Ex-Estate Sale

John Keells Ltd                                     Asia Siyaka Commodities (Pvt) Ltd

Mercantile Produce Brokers (Pvt) Ltd                Ceylon Tea Brokers (Pvt) Ltd

Somerville & Co. Ltd                                John Keells Ltd

Forbes & Walker Tea Brokers (Pvt) Ltd               Mercantile Produce Brokers (Pvt) Ltd

Ceylon Tea Brokers (Pvt) Ltd                        Lanka Commodity Brokers Ltd

Eastern Brokers Ltd                                 Eastern Brokers Ltd

Lanka Commodity Brokers Ltd                         Somerville & Co. Ltd

Bartleet Produce Marketing (Pvt) Ltd                Bartleet Produce Marketing (Pvt) Ltd

Asia Siyaka Commodities (Pvt) Ltd                   Forbes & Walker Tea Brokers (Pvt) Ltd


                       LCBL APPROXIMATE SELLING TIMES – SALE NO.41

Tuesday 20th October, 2009                                         Wednesday 21st October, 2009

Low Grown Leafy                     : 4.00 p.m.                    Off Grades              : 10.15 a.m.
Low Grown Tippy                     : 2.30 p.m.                    BOP1A                   : 2.00 p.m.
High & Medium                       : 11.30 a.m.                   Dusts                   : 12.15 p.m.
Supplementary                       : 3.30 p.m.                    Ex-Estate               : 9.30 a.m.

                                                                                   -/Cont„d… (P7)

                                         Other Markets
MOMBASA - Sale 40 of the 13th October, 2009

Good but irregular demand for the 77,529 packages (4.97 mkgs) on offer with many teas remaining
unsold (19.81%).

Brighter BP1s met very strong competition and gained USC 34-66 with Mediums irregular ranging
between USC 3-10 dearer for improved invoices but others declined by up to USC 10. Lower Mediums
saw better absorption at firm to USC11.

Brighter PF1s were a weak feature and lost USC7-16 while Mediums were discounted by USC8-25. Lower
Mediums were irregular varying between USC5 dearer for a few improved teas to easier by up to USC20.
Plainer types ranged between USC9 easier to dearer by up to USC14 for a few improved lines.

Brighter PDUSTs were generally USC4 to 19 dearer but a few lines eased by upto USC2 with mediums a
weak feature and were discounted by USC16 to 26 although a few coloury lines gained up to USC 20.

In the Secondary Catalogues BPs and PFs were irregularly firm to easier. Clean well sorted coloury
Fannings and Dusts lost value. Other Fannings were irregularly dearer with similar Dust easier. BMFs
were well absorbed.

Kazakhstan(CIS) was dominant especially on best BP1s while Pakistan Packers, Yemen and other Middle
Eastern countries showed more interest with Egyptian Packers quieter at the start but was more active
towards the close. The UK showed strong support with Sudan active but at lower levels. Afghanistan was
quieter while Bazaar, Russia and Egyptian Government Sector were subdued. Somalia showed more
interest at the lower end of the market.

                                CTC Quotation and Highest Prices (USC)

                             BP1             PF1            PD
       Best                  498-506        334-358       340-378
       Good                  482-501        334-347       334-347
       Good Medium           430-488        332-337       290-330
       Medium                325-374        270-286       232-250
       Lower Medium          184-301        192-255       210-242
       Plainer               143-192        160-228       195-240

                                                                                 -/Cont„d… (P7)

                                              TEA NEWS

Coca-Cola Tests Tea Brewer to Help Offer More Variety (Update1)
By Mark Clothier
Oct. 5 (Bloomberg) -- Coca-Cola Co., the world’s largest soft-drink maker, is testing a machine for
restaurants that can brew more than 18 different kinds of iced tea in portions to boost sales volume by
offering more variety.
The device, called the Flex Fresh, makes tea from Coca- Cola’s Gold Peak black or green tea leaves, Ray
Crockett, a company spokesman, said in an e-mail. Instead of brewing one batch and throwing out the
remainder, users can make tea by the glass, pitcher or gallon, adding sweeteners and flavors.
“You’ve had a very primitive sort of brewing process and a lot of waste,” Chris Lowe, head of Coca-Cola
North America’s food service unit, said in an interview Sept. 29 in Atlanta. “With Flex Fresh, it’s on
Most Coca-Cola customers carry one type of iced tea and offer it sweetened or unsweetened, Crockett
said. Restaurants throw out an estimated 20 percent of the tea they brew, he said.
The Flex Fresh is being used at 40 restaurants. Coca-Cola won’t comment on which restaurants are
testing the device or how much they’ll pay to have one, Crockett said. Testing started in July.
The amount of carbonated soft drinks sold has been declining in the U.S. and some overseas markets,
said Jack Russo, an analyst with Edward Jones & Co. in St. Louis. Noncarbonated drinks, including bottled
water and tea, have been growth areas for Coca-Cola and PepsiCo Inc., he said.
Soft-drink consumption in the U.S. fell last year to 47.5 gallons per person from 49.4 gallons, according to
Beverage Digest, an industry publication. Tea consumption rose to 7.3 gallons from 7.1 gallons.

Lipton Teas
PepsiCo has 39 percent of the ready-to-drink tea market in the U.S., excluding Wal-Mart Stores Inc.,
Beverage Digest data show. That compares with 9.6 percent for Coca-Cola’s teas. Most of PepsiCo’s
market share comes from Unilever NV’s Lipton, with which PepsiCo has a licensing agreement.
“Clearly Coca-Cola trails in the tea category versus PepsiCo, so maybe that device might help close the
gap,” Russo said in a telephone interview.
Coca-Cola, based in Atlanta, lost 7 cents to $53.80 at 4:15 p.m. in New York Stock Exchange composite
trading. Purchase, New York-based PepsiCo fell 5 cents to $60.85. Coca- Cola’s shares have risen 19
percent this year, compared with an 11 percent gain for PepsiCo.

October 14, 2009

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