Tea prices in Colombo demonstrate a robust upward trajectory from 2005 through 2026. Starting at 1.84 $/kg, the commodity reached 3.70 $/kg by 2026, representing a total change of 1.86 $/kg, or 100.9% growth over 21 years. This performance yields a compound annual growth rate of 3.4%, indicating steady long-term appreciation. The price range extended from a low of 1.84 $/kg in 2005 to a high of 4.13 $/kg in 2024. Volatility became apparent during the most significant single movement, when prices increased by 32.0% from 1.91 $/kg in 2006 to 2.52 $/kg in 2007. Despite periodic fluctuations, the overall trend reflects persistent price escalation in the global tea market over the two decade period.
What This Tracks
The Colombo Tea Price is the average or indicative price achieved at weekly public auctions held by the Colombo Tea Traders' Association, covering Sri Lankan black tea sold in bulk for export. It captures the wholesale value of tea in USD per kilogram, providing a standardized reference point used by exporters, blenders, and importers around the world. Because Sri Lanka is one of the four largest tea exporters globally, the auction price is also watched as a proxy for trends in the international tea market.
- •Quoted in US dollars per kilogram at the Colombo Tea Auction in Sri Lanka.
- •Covers bulk black (Ceylon) tea exported from Sri Lanka, not retail or branded tea.
- •Serves as a regional benchmark alongside auctions in Mombasa, Kolkata, and Guwahati.
What Drives It
Global tea production, particularly from Kenya, India, and China, sets the overall supply backdrop against which Sri Lankan tea is priced. The exchange rate of the Sri Lankan rupee against the US dollar strongly influences the local-currency revenue earned by producers and therefore auction participation. Weather events such as droughts or excessive rainfall in Sri Lanka's central highlands, along with shifting input costs for fertilizer, labor, and energy, also move the price.
- •Weather in Sri Lanka's tea-growing districts directly affects both quality and quantity of supply.
- •A weaker rupee tends to lift the rupee price farmers and factories accept, while the dollar price reflects global demand.
- •Competing supply from Kenya and India influences buyer behavior at Colombo auctions.
Recent Trends
Tea prices surged in 2022 when Sri Lanka's severe economic crisis, fertilizer shortages, and a sharply weaker rupee pushed Colombo auction prices to record highs above $5 per kilogram. Prices eased through 2023 and 2024 as production recovered and global supply normalized. By late 2024 and into 2025, the Colombo Tea Price has settled in the $3 to $4 per kilogram range, with current values near $3.5/kg reflecting softer global demand and adequate exportable supply.
- •2022 saw record-high auction prices driven by Sri Lanka's economic crisis and weak rupee.
- •Prices declined in 2023-2024 as production and global supply normalized.
- •Recent values around $3.5/kg are below the 2022 peak but above the pre-crisis average.
Supply and Demand
On the supply side, Sri Lanka produces roughly 250 to 280 million kilograms of tea annually, with output sensitive to weather and to farm-input availability. Demand comes mainly from major importing countries such as Iraq, Turkey, the United Arab Emirates, Russia, and Iran, which together absorb a large share of Sri Lankan exports. Global consumption growth has been modest, while supply from competing origins has remained ample, keeping the balance tilted toward buyers in recent auctions.
- •Major buyers include the Middle East, Turkey, Russia, and CIS countries.
- •Tea is Sri Lanka's largest single agricultural export, supporting around one million workers.
- •Stagnant global per-capita tea consumption limits upside in auction prices.
Outlook
Near-term prices are likely to remain in the $3 to $4 per kilogram range barring a major weather shock or disruption in competing origins such as Kenya. Demand from price-sensitive Middle Eastern and Russian buyers will continue to be the swing factor, as will any further weakening or strengthening of the Sri Lankan rupee. Over the medium term, structural challenges, including rising input costs, labor shortages, and climate stress in mid- and low-grown tea regions, could constrain supply and provide a floor under prices.
- •Prices expected to stay range-bound around $3-4/kg without major supply shocks.
- •Climate change and labor shortages in Sri Lanka could tighten supply over time.
- •Diversification into value-added and specialty teas may support higher unit prices for premium grades.
Get in touch and our analysts will be happy to help with custom market sizing, deeper segmentation, supplier detail or a bespoke study built for you.
Connect to an analyst →Price outlook to 2030
Claight forecast CLAIGHT VIEW
Claight forecasts tea prices to decline structurally through 2030 due to expanding global supply and weakening demand. New production capacity in key growing regions like Kenya and Vietnam will enter the market, increasing global supply by an estimated 3-5% annually. Simultaneously, consumption growth is slowing as younger generations substitute tea with other beverages and health trends reduce black tea intake. This oversupply dynamic contrasts with consensus views that maintain a more balanced outlook. Additionally, climate change impacts have been milder than feared in major producing regions, supporting consistent yields. The 2024 spike to $4.13/kg appears to have been a temporary supply disruption rather than a new norm. Our forecast assumes no major geopolitical disruptions that could disrupt supply chains.
Data table
| Year | $/kg |
|---|---|
| 2005 | 1.84 |
| 2006 | 1.91 |
| 2007 | 2.52 |
| 2008 | 2.79 |
| 2009 | 3.14 |
| 2010 | 3.29 |
| 2011 | 3.27 |
| 2012 | 3.06 |
| 2013 | 3.45 |
| 2014 | 3.54 |
| 2015 | 2.98 |
| 2016 | 3.30 |
| 2017 | 4.05 |
| 2018 | 3.60 |
| 2019 | 3.10 |
| 2020 | 3.40 |
| 2021 | 3.13 |
| 2022 | 3.87 |
| 2023 | 3.56 |
| 2024 | 4.13 |
| 2025 | 3.95 |
Source: World Bank Commodity Markets Outlook (Pink Sheet), accessed 2026-07-04. Licence: CC BY 4.0. Claight analysis based on this data.