The Hindu Business Line : Raw jute prices gain on low crop fears

Fibre factors
Consumption this year pegged at 108 lakh bales.
Consumers opting for jute bags to costlier synthetic ones.
Govt increases MSP of raw jute by Rs 195/quintal.

Ambar Singh Roy

Kolkata, July 24 Raw jute prices are on the upswing, thanks to expectations that the size of the raw jute crop for the jute year 2008-09 (July-June) will be substantially lower than in earlier years. The lower crop has been attributed to floods in several jute-growing areas earlier this year and a lower acreage under jute cultivation in the run-up to the 2008-09 jute year.

The benchmark TD4 grade raw jute (South Bengal) was quoted on Wednesday at Rs 1,500 per quintal at the Jute Balers’ Association here.

Production down

It has gained Rs 50 per quintal in the last seven days. On July 16, 2008, the TD4 grade fetched Rs 1,450 per quintal. It went up to Rs 1,460 per quintal on July 17, Rs 1,470 on July 18 and Rs 1,490 on July 21 before touching Rs 1,500 per quintal on Wednesday.

Informed sources here said that the size of the 2008-09 raw jute crop was pegged at around 75 lakh bales (each bale is 180 kg). This was lower than the 2007-08 production of around 93 lakh bales. The sources said the total raw jute available in 2008-09 jute year would be about 100 lakh bales, including a carry forward stock of 20 lakh bales and likely import of five lakh bales from Bangladesh.

The total consumption by the mills sector and others this year is expected to be around 108 lakh bales. In the 2007-08 jute year, the total consumption of raw jute was around 106 lakh bales.

Demand up

The expected increase in raw jute consumption this year has been attributed to an increase in the demand for jute goods, both hessian and sacking. The rise in the price of synthetic bags, as a result of rise in the price of petroleum products, has lately led consumers to opt for jute bags.

The number of times jute bags can be reused is also stated to be a factor in this regard. In addition to packaging foodgrains, cultivators prefer to pack potato and onions in jute bags as well.

The expected mismatch in the demand and supply of raw jute in the 2008-09 jute year has already found reflection in the sharp rise in the price of the golden fibre in raw jute markets here and in the upcountry.

The government, too, has increased the minimum support price of raw jute by Rs 195 per quintal over that of last year.

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