Jute prices may shrink on ample supplies, conducive weather

Having touched a peak of Rs 3,600-3,800 a quintal last year, raw jute prices may drop to the MSP (minimum support price) level this year. Industry insiders suggest that increased availability may soon bring down prices from the existing Rs 2,800 a quintal (ex-Assam TD-5 variety) by over 30 per cent to Rs 1,800-2,000 a quintal.

The prices, which have been softening over the last few months, are likely to remain just above the MSP (minimum support price) riding on good sowing and favourable weather conditions, a senior industry official said. The Government has fixed the MSP for TD-5 Grade of jute ex-Assam at Rs 1,675 a quintal for the jute season this year (Rs 100 a quintal more than that in the previous season).

“Raw jute sowing has been excellent this year, thanks to the availability of seeds and the favourable weather conditions. There has been intermittent rain over the last few days and the monsoon forecast for this year is also good. This has helped bring down prices, which was ruling at an all time high of Rs 3,600-3,800 a quintal last year,” said a senior official in the jute industry.

The production of raw jute is expected to be about ten per cent higher at 110 lakh bales this year. “Monsoon for 2011-12 has started on a good note and this may be the key factor for raw jute market price determination. It will also result in a good quantum and quality of production during this season,” he said.

The spot price of raw jute is likely to come down further as the price in the forward markets is ruling around Rs 2,400-2,500 a quintal. “Kankinara and Kelvin jute mills are offering Rs 2,800 a quintal for South Bengal TD-4, while some others like Hastings are quoting Rs 2,850 a quintal for the same grade of new crop. Advance booking for August has been made by Dalhousie mill with Rs 2,500 a quintal for TD-4 ex. South Bengal (landed Kolkata) and there is also an offer of Rs 2,400 a quintal for such forward booking of new crop by some other mills. So, further fall in spot price is expected if this trend continues,” the official said.

The market may rule at MSP rates during the peak arrival period of September in the principal jute growing districts such as Nadia and Murshidabad.

The fall in prices is despite a good demand for jute products this year. “The government has placed order of eight lakh bales so far this year and further demand is likely to come in for the kharif season. However, the market has already discounted this demand, so prices are not likely to rise,” he said.

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