Raw jute prices drop 5-7 % on estimated rise in production, good arrivals

Kolkata Raw jute prices have dropped around five-to-seven per cent over the last month on the estimated rise in production and good arrivals. Prices were currently ruling at around ₹6,200 a quintal against ₹6,500 a month ago.

Jute output is estimated to be six-to-seven per cent higher at around 95 lakh bales in 2022-23 as against close to 90 lakh bales last year. This year’s carryover stock is estimated to be about 19 lakh bales against5 lakh bales last year. The total availability is likely to close to 114 lakh bales, as against 95 lakh bales last year.

According to Raghav Gupta, Chairman, Indian Jute Mills Association, the crop availability is good and all the mills have reopened and running at good capacity.

“Prices have seen a correction of around 5-7 per cent at the beginning of harvesting period. It is likely to come down further when arrivals start picking up,” Gupta told BusinessLine.

Higher sowing but quality could be impacted

Enthused by the highly remunerative prices of raw jute over the last two years, farmers have gone in for higher sowing covering close to 8 lakh hectare this year. However, inclement weather has prevailed in jute growing areas in June and July, with flooding in North Bengal and Assam and less rainfall in South Bengal affecting retting.

The quality of jute fibre is expected to deteriorate and production of TDN3 and TDN5 grades will likely to increase to 75 per cent of the total produce and these grades can only be used for sacking manufacturing, an industry insider said.  

The raw jute prices were close to ₹7,000-7,200 a quintal in April-May this year despite higher production of the fibre in 2021-22 due to low carryover stock. Accordingly, the Jute Commissioner, had, in a notification dated September 30, 2021, fixed the price of jute at ₹6,500 a quintal for 2021-22 till June 30, 2022 to rein in the prices. However, mills were finding it difficult to procure at these rates as market rates are much higher.

The price cap of ₹6,500 a quintal fixed by the Jute Commissioner not only caused the closure of jute mills across the country but also led to more than 50 per cent of the demand for food grain packaging during the ongoing Rabi Marketing Season (RMS) 2022-23 being met through polypropylene bags.

However, given the robust availability of raw jute this year, industrial production is estimated to increase to 13 lakh tonne, compared to close to 12 lakh tonne last year, as most mills have resumed operations. The industry will be able to supply anywhere between 34-36 lakh bales on government account, apart from meeting other domestic and export commitments. The demand from the foodgrain sector is expected to be around 35 lakh bales this year. Hence continued reservation of 100 per cent for foodgrain and 20 per cent for sugar should be maintained, an industry expert said.

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