Sri Lanka cuts 2012 tea output forecast on drought

COLOMBO, July 18 (Reuters) - Sri Lanka now expects 2012 tea
production of around 325 million kg, below its target of 330
million kg, as output has fallen in the last five months due to
drought, the state-run tea board said on Wednesday.
Tea production in the first half of the year fell 4.3
percent year-on-year to 163.26 million kg from 170.66 million kg
and June output fell 13.2 percent to 25.8 million kg compared
with 29.74 million kg in the same month a year ago.
The tea board had earlier expected output to be slightly
higher than last year's 328.37 million kg, and saw 2012 export
revenue at a record high, surpassing last year's $1.5 billion,
due to higher prices.
"Severe drought is the basic reason for the fall," Sri Lanka
Tea Board Director General H.D. Hemarathna told Reuters. "With
June having a severe drop in high grown areas, then 325 (million
kg) is more rational than 330 (million kg)."
High grown tea output, which accounts for about a fourth of
production, fell as much as 29.4 percent in June, amounting to
60 percent of the total fall.
Output hit a record 331.43 million kg in 2010.

Revenue from the country's top agricultural export commodity
fell 11.7 percent to $421.1 million in the first four months of
2012 compared with the previous year, central bank data showed.
Analysts say the earnings outlook for 2012 is unclear due to
a possible dip in exports to Iran, which buys a fifth of Sri
Lanka's tea directly.
Other countries in the Middle East are also major buyers,
but political turmoil may limit their appetite for Sri Lankan
tea, traders say.
Tea is one of the $59 billion economy's main foreign
currency earners, along with remittances, garment exports and
tourism.
Following table shows Sri Lanka's June tea output (in kg):

June Jan-June
2012 2011 2012 2011
High Gr 5,673,605 8,041,272 38,906,310 44,303,472
Medium Gr 3,754,563 4,938,661 27,519,211 28,160,442
Low Gr 16,378,643 16,765,756 96,839,258 98,200,865
Total 25,806,811 29,745,689 163,264,779 170,664,779
($1 = 132.2000 Sri Lanka rupees)

(Reporting by Ranga Sirilal; Editing by Shihar Aneez and
Anthony Barker)