Tea shipments weaken in March as demand softens across key segments

Sri Lanka’s tea export volumes fell sharply in March, extending a weak start to the year, although higher rupee-denominated prices helped soften the impact on earnings.

Tea exports for March 2026 declined to 19.73 million kilogrammes, down 3.70 million kilogrammes from a year earlier, with all major segments—except instant and green tea—recording negative variances, according to the industry data.

The drop was led by bulk tea exports, which contracted by over three million kilogrammes year-on-year, while packeted tea and tea bags also posted declines, pointing to broad-based weakness across product categories.

Despite the volume contraction, the export prices showed resilience. The average free-on-board (FOB) value rose to Rs.1,813.84 per kilogramme in March, up Rs.60.68 from a year earlier. However, in dollar terms, returns slipped marginally, reflecting the currency effects and softer global pricing dynamics.

The divergence between volumes and prices suggests that while the exporters are benefiting from improved rupee realisations, underlying demand conditions remain uneven.

On a cumulative basis, tea exports for the first quarter of 2026 totalled 60.36 million kilogrammes, down 2.84 million kilogrammes from the same period last year, reinforcing concerns over sustained demand weakness in key markets.

Still, cumulative FOB values increased by Rs.68.47 to Rs.1,807.27 per kilogrammes, indicating continued pricing support across segments, even as the volumes declined.

Market dynamics among key buyers showed mixed trends. Iraq retained its position as the largest importer of Ceylon Tea, though volumes dipped slightly year-on-year. 

Turkey emerged as a standout, more than doubling imports to secure second place, while Russia slipped to third with a notable decline.

Meanwhile, traditional markets such as the UAE recorded sharp contractions, underscoring shifting trade patterns and demand volatility across regions.