Winter 2027 Could Raise Tea Prices Across the Arab World… So Who Will Pay More?

In July 2026, India's tea production dropped to 164.3 million kilograms, nearly 10% lower than in July 2025, while North Indian production alone fell by 13.6%. Taking a different direction, China exported 4.2% less tea during the first seven months of the year, but the average export price per kilogram rose 8.8% to $3.90. These two figures reveal the most crucial factor determining Arab tea prices in the coming winter: the world does not have a single tea market.

Three-quarters of tea produced globally is consumed within producing countries, according to the Food and Agriculture Organization (FAO), meaning only about a quarter of the harvest enters international trade. Although China produces more than half of the world's tea, its abundance cannot automatically offset shortages of CTC black tea in India or East Africa. Packers can alter blends within limits, but switching origin and variety changes the color, taste, and extraction speed that consumers expect. As a result, global production numbers may appear reassuring while the supply needed by a specific Arab market remains tight.

This fragmentation is clearly visible across the Arab world. In 2024, Egypt imported around 73.4 million kilograms from Kenya, with Kenyan tea accounting for nearly 89% of its import value. Morocco operated in an entirely different ecosystem: 77.1 million kilograms out of roughly 79 million came from China, representing nearly 98% of the volume. Saudi Arabia is more diversified among Kenya, Sri Lanka, India, and re-export hubs. Therefore, tea prices could rise in Cairo and Rabat simultaneously for different reasons, or one price could move while the other remains stable.

The fourth quarter of 2026 enters with mixed supply signals regarding the route that matters to Egypt and a large part of the Gulf and Levant. Data from the Tea Board of India shows that North India produced 139.8 million kilograms in July compared to 161.7 million a year earlier, while South Indian production rose to 24.6 million from 20.9 million. The shortfall is geographically concentrated more than the national figure suggests. In Sri Lanka, January–July production reached 153.1 million kilograms, down 2.6%, and exports fell 4.9% to 143.5 million.

More importantly in Sri Lanka's case, the decline in exports to the Middle East during the summer was far greater than the drop in crop yield. The Sri Lanka Export Development Board recorded a 47.9% fall in tea export revenues to the region in July compared to the previous year. This gap cannot be explained by farms alone; trade conditions, demand, and shipping routes have entered the equation. If trade movement improves in the autumn, purchases postponed during the summer might return while production remains below 2025 levels, increasing competition for certain grades popular in the Arab market.

Kenya prevents the picture from automatically turning into an expectation of a price surge. The latest data from the East African Tea Trade Association places the average CTC tea price at the Mombasa auction near $2.14 per kilogram, a level that does not yet indicate exceptional scarcity. This is significant because Kenya is the crucial supplier to Egypt and one of the main suppliers to Saudi Arabia, Jordan, and Oman. What happens to its crop in the coming months could weigh more heavily on the Arab consumer than changes in global average production as a whole.

This is where weather enters as the fastest variable. On September 3, the World Meteorological Organization raised its estimate to an almost 100% probability that El Niño will persist through February 2027, with expectations of strengthening near the end of the year. In East Africa, the ICPAC center forecasts above-normal rainfall across wide areas during October–December, driven also by a positive phase of the Indian Ocean Dipole. Extra rain could accelerate tea leaf growth if well distributed, whereas excessive rain can deteriorate quality and disrupt picking and transport. Therefore, the volume and distribution of rain within Kenyan tea regions will matter more than the name of the climate phenomenon itself.

As for the Moroccan trajectory, it primarily stems from China. Between January and July, China's exports fell to 223.6 thousand tons, while their value rose 4.2% and their average price climbed 8.8%. The volume reduction was not accompanied by a price discount, a sign more critical for Morocco than the movement at the Mombasa auction. A continued rise in Chinese unit value in the fourth quarter will narrow the Moroccan importer's ability to lower prices even if black tea markets cool down.

The transmission of these movements to the consumer is slower than auction dynamics. A recent FAO study using a global market model found that a supply shock increasing tea production by 5.7% reduces the real price by about 3.8% after roughly five months. The organization also found that raw price changes reach retail only partially, because packaged products also carry transport, packaging, financing, and distribution costs. Added to this is the exchange rate in markets whose currencies fluctuate against the US dollar. Therefore, the fourth quarter of 2026 is more likely to see stability at elevated levels or limited, uneven increases rather than a unified Arab price spike.

In the first quarter of 2027, upside risks become clearer if weakness persists in North India and Sri Lanka, East African rains shift from supporting the crop to creating quality or transport problems, and average Chinese export prices continue to rise. Alternatively, the market could take a calmer path if Kenyan rains boost production without major damage and the Indian harvest recovers, as increased available quantities would prevent buyers from chasing prices. Assessing the trend here is conditional on what happens in the fields during autumn, not merely extrapolating summer prices forward.

The early signal will not appear in a single global figure. For black tea, the ratio of sold to offered quantities in Mombasa warrants monitoring alongside North India's harvest, and for Morocco, the average export value per kilogram of Chinese tea is worth watching. If these indicators begin rising before the end of the year, price pressures for the first quarter of 2027 will have emerged in origin markets weeks before reaching the shelves of Arab stores.