The Pu Er Maocha price of This year

[jktea]

The other day, one of my Aini minority farmer called me, and asked me when I visited Nan Nuo mountain in this spring time. So I asked causually the Maocha price of this year. Jesus christ! I just can not believe what I heard. The price of pure old tree Maocha is over twice of last year. I understand the Maocha of this year will be higher, due to the serious drought in Yunnan this year, which leads to low yield, and the Pu Er heat again now, but did not expect such high.

Now all I hope is the price will be lower a little bit, so Pu Er lovers can still enjoy top quality Pu Er tea at a reasonable price.

[shah82]

Oh, I got that alright. Made some expensive banzhang purchases because puerh is still cheap, and good banzhang is pretty much on the class of the sidimincang, and they are still modestly cheaper than they really should be. I'm still surprised that Nada's 2005 Banzhang is available at his price.

Also, I think that there will be major increases in the price of *drinkable* sheng soon as more growth hits west and labor cost rises in depressed rural areas. Not to mention the inevitable yuan revaluation. If the yuan doesn't revalue, the value of pu as a storage alternative to banks for cash will rise, so one way or another, puerh will be coming up. Hopefully, the hoarders will cash some profits and slow the increase by making stocks availabe as we go along.

[jktea]

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Oh, I got that alright. Made some expensive banzhang purchases because puerh is still cheap, and good banzhang is pretty much on the class of the sidimincang, and they are still modestly cheaper than they really should be. I'm still surprised that Nada's 2005 Banzhang is available at his price.

Hi Shah82,

Just curious, In your opinion, what is the right price for the pure Lao(old) Bangzhang teas of last year? My friend purchased the pure Lao Bangzhang old tree 2007 Maocha at a price of USD200/kilo. If make a 357g cake, then the market price should be at least USD110/cake. Do you think it is hight or not? Of couse, the bush Lao Bangzhang Maocha is quite cheap.

[TIM]

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Oh, I got that alright. Made some expensive banzhang purchases because puerh is still cheap, and good banzhang is pretty much on the class of the sidimincang, and they are still modestly cheaper than they really should be. I'm still surprised that Nada's 2005 Banzhang is available at his price.

Hi Shah82,

Just curious, In your opinion, what is the right price for the pure Lao(old) Bangzhang teas of last year? My friend purchased the pure Lao Bangzhang old tree 2007 Maocha at a price of USD200/kilo. If make a 357g cake, then the market price should be at least USD110/cake. Do you think it is hight or not? Of couse, the bush Lao Bangzhang Maocha is quite cheap.

If that's the price for a pure LBZ old tree (70 years and up) for USD 200/kilo. I would like to get some.

[shah82]

I am not anything like an expert in tea, especially puerh. I tend to think some young sheng drinkers just likes rotgut! Plenty of flavor, yes, but so rough, so much unrestrained caffiene, and considerable action on your digestive system. Those teas to age, dammit! Don't drink it! ?:~)

I made my decision this way...

Houde is one of my trusted vendors. I get irritated with them, as I do with all merchants, but the quality generally matches the outstanding prices if not always dollars to tastebuds.

Anyways, I decided to go on a puerh bing and sample lots of stuff. I first ordered the peacock sample set from jas-eteas. I enjoyed them, but drinking those teas at any consistent basis brought digestive upset. Mengsong (which I preferred most) and Menghai were pretty good experiences, while the Bulang was good (I tend to like Bulang) as well as Nannuo. Bada was just not very impressive. Getting a complete set didn't seem like a bad idea, and it's relatively cheap, with only the Bada being deadweight to be put aside to see if it gets better.

Then I ordered a bunch of samples from Houde...2005 Banzhang, 2006 Tai Chi Yan and Yin, 2006 Yiwu from Sanhetang and Changtai, Dingji Yanshing, Hong Kong Henry 2003. The results were that, with reading lots of reviews, I concluded that Yiwu is a finicky tea that tends to generate lots of contradictory reviews and is also inconsistent in flavor in my brewing setup. The energy and aromas are pretty consistent though, but compared to something like Mengsong Peacock or Nannuo Peacock (which are to me, similar tasting), $110 is a bit much, despite the smoothness of the experience. One thing I figured pretty quick, compare the XZH and other premium new stock with the older teas like the 2003 Menghai Bulang, Kumming Lan Tie, or HK Henry, because those teas tend to be valued more purely for their taste and potential... If it's not really as good as those older teas, it's probably not worth it unless there is real depth that might generate more flavors, and most fancy pu for the nouveau riche attempt to stride strength and smoothness, so if it's not that good at the start...2006 Yiwu is out. 2005 Banzhang sample was in the awkward age phase and it was always one of those restrained and refined tastes in the first place. It was very good, though. Too bad there is not a beeng available. 2006 Banzhang tai chi was very interesting. Yan was a multistager. First few infusion was wildly unbalanced to the high 'shroom/camphor side, but with a ton of other flavors including spicey woody notes that promise much. The middle infusions resolved into a very balanced tea with still a ton of interesting flavors. The latter infusions gave a consistent general good tasting flavor that pretty much went on as long as you wanted. Awesome tea for grandpa style drinking. What was most impressive about the tea was that aftertaste changed as well, from higher floral notes to, what was bewildering and highly addictive to me, coffee with lots of cream, toffee and vanilla...Kahlua? Along with the lower notes filled with meaty shrooms and yam (similar to the favored ZhongPing LaoCong Dancong 1 from TeaHabitat) and tobacco, this tea was wildly satisfactory to me. The Yin was much better balanced from the start, but was too mild from too many buds for me.

So I did internet research to figure out whether if this tea is worth buying. From the start, I know I liked it better than the Kumming Lan Tie at $120, so I was pretty inclined to buy a beeng really. There were lots of rants about how XZH is overpriced and that the Tai Chi set was unimpressive for the price. So I wondered around the web and saw how puerh prices were cheap. And yes, they are cheap. Mostly, from what I figure, they are bad tea that gotta be cured before drinking. Truly drinkable young sheng is definitly underpriced. Also, it seems that Banzhang tea is similarly overwhelming to many other palates, to the point that similar quality leaves is very much better than other quality sheng from other mountains.

So what else causes young sheng to be cheap? I hypothesized that most labor happens out west, and the labor costs were very, very low, and highly mechanizable, compared to traditional TieGuanYin say. So I think China is growing right now, and most of the reasonable profit margins probably comes from investing in the crucial border regions, Yunnan and Xinjiang, specifically, so there is probably a great deal of push up in labor cost that is happening, as well as more farmers coming into contact with developed markets and getting a better idea of how much their maocha is truly worth. Moreover, more consumers in China is becoming more aware of puerh, especially as an alternative in storing money, and avoiding the mechanisms that the state uses to force high savings rates and direct cash towards its priorities (which means very low interest rates in bank accounts and limited opportunities to safely invest for higher interest rates). Of course this idea is dangerous if you try to scale up because eastern merchants got huge stocks, enough to control the markets and they'll drive up the prices and shear the sheep as time goes on.

Lastly, drinkable Banzhang is really, really, good. I suspect they'd make *very* good yancha and hongcha, and I think as time goes on, more and more maocha is going to be diverted into alternative paths with established markets, the simplest being selling the maocha. There is a great deal of added value possible with this tea and more and more of the maocha will go into the friends and big people only markets. The result being that there are going to fewer and fewer beengs with premium leaves available with Xinbanzhang and other nearby teas becoming the Beidou of the West. Therefore, any beengs with a strong likelyhood of being real Lao banzhang is likely to have a permanent market and very low elasticity of demand, and I think Imen of TeaHabitat made a pretty shrewd move by buying all those 2005 bricks some time back, cause I suspect she's unlikely to lose money (and she'd still have good tea, even if it's too much) absent closure of international markets to china.

So I go for the personal calculation. How much is that cake worth in overall tea terms? I judged the pleasure to be worth about a decent dancong from Jing Tea Shop and about a 130% or more of Imen's regular Chatou. So I figure in pure tea terms, the Yan Tai Chi is definitly worth about $90-$110, which is pretty good for XZH tea. I also thought that the availability of Lao banzhang product will very inconsistent for anything not the last two years, so I decided to buy two. One to nosh now, and one to age later, and take the considerable opportunity cost pain now, and wait a year to get many other cakes.

[bearsbearsbears]

Quotes I've seen show prices only about 30-40% up year over year. Post-summer, after the rainy season, prices will likely normalize.

I don't see the revaluation of the Yuan happening anytime soon; Chinese fiscal and economic policy remains heavily dependent on cheap exports and leveraging Government spending and bank lending with US treasuries.

As far as domestic demand goes, reports from Beijing's Maliandao tea market indicate demand for pu'er is slowing in China, replaced primarily by tie guan yin. I hear from friends who visited Jinghong that the new tea mall is only 30% occupied.

It's much easier to buy and sell bullion, equities, debt, etc. than sell large amounts of pu'er. I hope Chinese don't put a majority stake of their portfolio in pu'er. They might find themselves with an unliquifiable asset in hard times! Steepable, yes. Liquifiable, no.

[dobermanlover]

I would agree with bears3x... We have already started buying sacks of mao cha from different areas. Prices for Yi Wu are up about 30%-35% from last spring, other Banna areas Like Youle, Mengsong, Bu Lang and Nannuo about 20% to 30% over last year. Banna mao cha prices seem to be driving price increases in Lincang and Simao, with prices up about 20% to 30%. First flush is a little late this year, due to dry conditions the trees are sprouting slowly and tea pickers/farmers are not wanting to pick too early otherwise overall weight of their processed mao cha will be less.
From what I have tasted quality is quite good... though care in processing should be taken since the overall water content of the leaves is lower than usual.
China is not going to re-value the RMB anytime soon. Their economy would suffer if exports were cut significantly. The prices for high quality Pu-erh are gradually climbing, since the people who are still consuming it domestically have become more educated and picky! The prices for low end cakes aren't going anywhere.

[sp1key]

The prices for high quality Pu-erh are gradually climbing, since the people who are still consuming it domestically have become more educated and picky! The prices for low end cakes aren't going anywhere.

I think this basically sums up the current market in China. More educated and picky. There are cases of cash rich Chinese who are engaging more experienced tea merchants to press batches of tea for them with high quality being the priority. This for some self indulgence, personal satisfaction and some element of investment.

Yiwu's increase this year is much less than last year's increase on the year before. All this inflation is only pushing up prices of aged puerh. A more important issue nowadays is finding quality material and hopefully price is workable.

[shah82]

Just got back from work, so a quick comment...

1) My theory is largely for the high quality stuff. Of course, some people would try to "invest" in general marketplace crap, but they'd get sheared. Large amounts of a grade you'd call "investment" quality aren't available in the general marketplace.

2) I'm reasonably close to certain that some sort of revaluation of the yuan will come by a year. My geopolitical reading suggests that there is a very vocal minority in the Zhongenai that's advocating for the revaluation because of the bad debt (and bubbles like the puerh one in 07) problems that is occuring internally, and the strains, especially with neighboring countries, let alone the US and EU that a mercantilistic policy is introducing.

[beecrofter]

One can only hope that higher prices for raw material will mean greater care in processing, after all you rarely see packing crates made from walnut!

[jktea]

Today in late afternoon, I got a text message from Nan Nuo Shan friend. they told me happily now it finally rained today. I am very happy to hear that. It means the quality of this year will become better.

Yes, Chinese consumers are becoming more and more picky. Now there are a growing group of Pu Er lovers who seek only the pure old tea tree Pu Er. In the market, I assume two reverse direction on the Pu Er quality. One only focuses on pure old tea tree Pu Er, top quality. Another is bush Pu Er.

We are not going to focus on Yiwu tea, which we think all the age of tea trees are still too young, based on our criteria. Bulang, Laobangzhang, Yibang are super.

[shah82]

what's the characteristic flavor of yibang?

[bearsbearsbears]

2) I'm reasonably close to certain that some sort of revaluation of the yuan will come by a year. My geopolitical reading suggests that there is a very vocal minority in the Zhongenai that's advocating for the revaluation because of the bad debt (and bubbles like the puerh one in 07) problems that is occuring internally, and the strains, especially with neighboring countries, let alone the US and EU that a mercantilistic policy is introducing.

I guess what I'm saying is that a revaluation of the RMB would devalue the US dollar, making China's heavy reserves of US treasuries worth much, much less at a time when China is buying USD, selling RMB, and keeping interest rates flat to put downward pressure on the RMB. Thus, I don't see revaluation happening dramatically or quickly.

From articles in the WSJ, FT, & other Western business media outlets, I gather that until the CPC determines a new reserve currency (1), they appear to be enforcing nationalistic and protectionist measures protecting state industries as a part of their short-term response (2)--significant more, perhaps, for underlining China's bowing to its export firms' lobbying pressure to keep the RMB stable.

Maybe I should welcome the yuan revaluation and subsequent lack of lending. Maybe some of the firms holding 1980s-1990s puerh will have to liquidate their stocks to raise capital!

1. "China Takes Aim at Dollar" http://online.wsj.com/article/SB123780272456212885.html

2. "China Toughens Rules for Foreign Companies" http://online.wsj.com/article/SB2000142 ... 68686.html

[nicolas]

Commodity prices rocket as drought hits
Choi Chi-yuk
SCMP Mar 22, 2010

Prices of several agricultural commodities are skyrocketing on the mainland as a once-in-a-century drought scorches southwest China.

Commodities the region is known for - including cane sugar, flowers, tea, fruit, rubber and coffee - have taken a beating as unusually high temperatures, dry conditions and up to 80 per cent less rainfall than last year, reduced output by as much as 50 per cent, state broadcaster CCTV reported yesterday.

Yunnan, Guizhou, Guangxi, Sichuan and Chongqing have been hit by drought since September.

Cane sugar prices have risen nearly 25 per cent since November, while export prices for flowers have jumped by about 50 per cent compared with the same period last year, according to industry insiders.

Wei Guojian, secretary general of the Guangxi Sugarcane Association, said yesterday that the wholesale price of a tonne of white sugar had increased by 23.8 per cent, from 4,200 yuan (HK$4,774) in November to 5,200 yuan.

"This rare price surge is mainly due to a significant reduction in the sugar production resulting from the drought in Yunnan," Wei said. "As far as I know, sugar produced by the province has dropped from 2.25 million tonnes last year to 1.6 million tonnes this year."

Sugar cane is harvested between November and March.

Guangxi accounts for nearly 70 per cent of the country's sugar production, while Yunnan is the second-biggest producer.

Wei insisted that Guangxi's sugar cane crop had suffered relatively little compared with that of Yunnan, where the cane fields were hit hard by drought.

But a Nanning-based industry insider said yesterday that Guangxi had sustained a severe loss in terms of sugar production. He said the region produced just 6.8 million tonnes of white sugar, a year-on-year drop of 830,000 tonnes, or nearly 11 per cent.

"Sugar at 5,200 yuan per tonne is without doubt the highest price for at least three years," said the owner of a sugar trading company who declined to be named.

He added that Chongzuo, the largest production site for sugarcane in Guangxi, as well as Baise and Hechi , were among the areas hardest hit.

But, he said, Laibin, the second-biggest sugar cane production base in the region, was affected only moderately.

"The quality of grade-A sugar manufactured by our country is not good when compared with that available in the international market. Hence, only a negligible amount is exported," the industry insider said. He said that Ng Fung Hong - a Hong Kong company - was one of the few importers of sugar from Guangxi.

The wholesale price of flowers, mainly roses, planted in Yunnan and exported to Hong Kong, has soared about 50 per cent compared with last year, Hu Yang , of Yunnan Lidu Flower Development, said yesterday.

Yunnan, the mainland's largest flower producer, exported US$760,000 worth of the commodity in 2008. The province sends about 14,000 roses to Hong Kong every day, and exports tens of thousands of flowers to overseas markets including Japan, Russia and Thailand.

"Looking at the big picture, the quantity of flowers produced in our province has plummeted from one million to roughly 700,000 a day, but the price has risen some 50 per cent from last year," Hu said.

"A top-quality red rose, for instance, used to be sold at between one yuan and 1.5 yuan, but this year, prices range from 1.5 yuan to two yuan because of the drought," she said. The price of a bouquet of 20 carnations, one of the most popular choices of Japanese customers, was about 50 fen, up from 30 fen this time last year.

Aside from price and quantity, Hu said the quality of flowers had also been affected by poor irrigation resulting from the extremely dry weather.

Tea producers in Yunnan said they expected Puer prices to rise 30 per cent to 100 per cent this year because of the drought, according to Nanfang Daily. The drought has affected 200,000 hectares of tea plantations and destroyed more than 3,300 hectares of tea trees in Yunnan since autumn, an official with the department overseeing tea trade in the province told the China News Service yesterday.

Meanwhile, Premier Wen Jiabao called for intensified and consistent efforts to ease drought and help those affected, as he wrapped up a three-day trip to Qujing , one of the hard-hit regions in Yunnan, yesterday, Xinhua reported.

About 51 million people have been affected by the drought, including more than three million in Guizhou who were facing food shortages.

The temperature in downtown Chongqing hit 32 degrees Celsius yesterday, and high temperatures led to a wildfire in one district of the municipality which destroyed more than 20 hectares of plantations.

Food prices soar in drought-hit Yunnan
Social unrest fears grow amid grain shortages
Choi Chi-yuk
SCMP Mar 20, 2010

Staple food prices in some areas hit hard by the severe drought in Yunnan , where seven million people face grain shortages, have risen by roughly 40 per cent over the past month, residents said yesterday.

The provincial civil affairs bureau said more than half of the province's summer grain would be destroyed by the severe drought, which would cost the province 10 billion yuan (HK$11.3 billion) just from crop failure, a report carried by the Xinhuanet news portal added.

Meng Jiaxue , a primary school teacher in the town of Fucun in Qujing , said yesterday that he was very worried about social stability in the local community due to panic and anxiety triggered by the rapidly rising cost of basic food as a result of the once-in-a-century drought that began in September.

"For example, the price of a 25kg bag of rice is now 105 yuan to 110 yuan while it only cost us about 75 to 80 yuan before the Lunar New Year," Meng, 46, said. "Aside from grain, prices of other staple foods, including vegetables and cooking oil, have also risen by between 5 per cent to 30 per cent over the past month.

"Worst of all, living costs have kept rising and rising, with the prices of basic necessities even surging in just two days," he said. "That, in turn, may prompt chaos and even threaten social stability here.

Meng said other residents shared his fears, with unconfirmed but widely-circulated news reports saying that food had been stolen nearby and that others had begun stockpiling grain for speculation.

Yunnan Daily said provincial party secretary Bai Enpei had pledged to protect people from the drought, saying: "Millions of residents in our province are now struggling against shortages of drinking water and food. Ensuring them a normal living is the overriding priority [for local government]."

Flower prices have also risen markedly. The province accounts for 80 per cent of the mainland's flower supply, but more than 30,000 hectares, or approximately 80 per cent, of its flower fields have been affected by the disaster, an official with the Yunnan Provincial Flower Industry Office told Xinhua.

The official said the price of a good quality rose had recently surged to four yuan, more than double the price this time last year.

Yunnan is also the mainland's second largest sugar producer but output is expected to fall by 30 per cent or 4.5 million tonnes this year. Sugar prices in Beijing have already risen to 6.5 yuan a kilogram, compared to 5.8 yuan in January.

Meanwhile, an official with Yunnan's flood control and drought relief command was quoted by China Economic Times as warning that up to 10.14 million people - a quarter of the province's population - could face drinking water shortages if the drought did not break before May.

Meng said the residents of Fucun had to fetch water from five kilometres away.

The Central Meteorological Observatory in Beijing predicted on Thursday that the drought would worsen, with no substantial rainfall expected for the next 10 days.

During a meeting in Beijing yesterday, unnamed officials of the National Disaster Reduction Committee said more than 51 million people were suffering from the drought in Guizhou , Yunnan, Guangxi , Sichuan and Chongqing , Xinhua said.

More than 10,000 armed police had been dispatched to the five regions to help with relief efforts.

Drought forces Yunnan to ration power
Reuters in Beijing
Updated on Mar 16, 2010
Yunnan province was preparing to cut power supplies to a growing number of energy-intensive and high-polluting firms as a severe drought in the region sapped hydropower output in the region, a local government official said on Tuesday.

“The government has drafted a plan that would prioritise power supply to residents and some important users while further curbing flows to energy-intensive firms,” said the official who is familiar with local power industry but who declined to be named because he is not an authorised spokesperson.

“All backup generators have been mobilised and electricity flows to Guangdong have been cut,” he said.

“The scope and extent of power restrictions will be decided by the developments in demand-and-supply situations.”

Yunnan, whose hydropower stations account for nearly 70 per cent of capacity in the province, has been facing difficulty to generate enough power for its own needs since late last year because of the worst drought conditions in more than half a century.

At least 30 per cent of the regions in Yunnan have power shortage problems, state media have said.

“We expect the rainy season will only come in mid April or May,” the official said.

China's Southern Power Grid, one of two state grid firms, expects tight power supplies in April and May in regions it covers because of low water levels, its former chairman, Yuan Maozhen, said on March 4.

The grid, which covers Yunnan, Guizhou, Guangxi, Guangdong and Hainan provinces, has reduced power flows from Yunnan to Guangdong by 1.25 billion kilowatt hours (kWh) in March.

It has cut flows from Yunnan to Guangdong by 4.23 billion kWh so far this year, according to the grid.

[shah82]

Check out Nada's blog for interesting details.

http://afelicificlife.blogspot.com/2010/03/dry.html