Nairobi, Aug 19 - Kenyan tea prices hit record levels at this week's auction in Mombasa on drought fears ahead of the Muslim holy month of Ramadan, when trading in Islamic countries falls sharply and consumption there rises.
Tea offered at the weekly auction has fetched high prices most of this year as buyers stocked up over worries that drought will cut output in the world's biggest exporter of black tea.
Mombasa-based Africa Tea Brokers (ATB) said strong general demand continued for the 83,860 packages (5.28 million kg) on offer at this week's sale. Just 13 percent was left unsold.
Top BP1s changed hands at between $3.88-$3.52 per kg from last week's $3.82-$3.38, or an average of $3.70 -- beating a previous record of $3.69 in early June.
Kenya, which sets global benchmark prices, usually sees subdued production during the cold season between June-August, when farmers take the opportunity to prune bushes.
Industry officials say there has been insufficient rain on farms around Mount Kenya in the central region, and meteorologists are predicting prolonged drought in that area.
Leaf production in Kenya is expected to fall by some 6 percent this year due to dry weather, but earnings are seen rising to about 65 billion shillings ($851.3 million), versus last year's 62 billion shillings, due to the record prices.
The Islamic holy month of Ramadan, when Muslims worldwide fast during daylight hours, is expected to begin in a few days.
"Egyptian Packers lent very strong support while Yemen and other Middle Eastern countries showed strong enquiry with Pakistan Packers, Afghanistan, Sudan and UK and Kazakhstan more active," the ATB said of this week's sale in a market report.
Best PF1s sold at $3.58-$3.40 compared with $3.46-$3.36 previously, it added.
Tea Brokers East Africa said another 78,869 packages will be up for sale at next week's auction. The sale held every Monday and Tuesday offers tea from 12 African producers, but most of the black tea sold there is grown in Kenya.
The Kenyan government named a new board for its tea industry regulator on Tuesday in a bid to drive reform of a sector that is its second biggest source of hard currency.
Proposed reforms include minimum education qualifications for factory directors, as well as the barring of factory managers from officiating at elections for factory directors.
Factory mismanagement is often criticised by farmers in east Africa's biggest economy, some of whom cut down their tea bushes last year in anger at low earnings.
Brokers at Mombasa's weekly auction will also be registered, and those who fail to pay farmers their earnings will be barred.