Agri Business

Raw jute prices fall 17% since June, may drop further

Shobha Roy Kolkata | Updated on July 27, 2021

Higher sowing spurred by favourable weather and good prices fetched by the golden fibre last year

Raw jute prices have dropped by 17 per cent over the last couple of months, from over ₹9,000 a quintal in mid-June to ₹7,500 currently. They are likely to drop further on the heels of bumper sowing and anticipated higher production than last year.

According to Raghav Gupta, Chairman, Indian Jute Mills’ Association (IJMA), West Bengal is likely to produce nearly 55 per cent more raw jute, or 85-90 lakh bales (180 kg), in 2021-22 against 55-58 lakh bales in 2020-21. This resulted from favourable weather conditions and an increase in sowing area due to the highly remunerative prices the golden fibre fetched last year.

“Jute sowing has increased this year on higher prices and conducive weather. Monsoon has also been good in growing regions of Bengal, Bihar and Assam. The quality of fibre available for retting is also good,” said Abhishek Murarka, Chief General Manager (CGM), Cheviot Co Ltd.

Kharif Outlook: Jute output set to rise 55% on better returns

Murarka said prices could decline further to ₹6,500 a quintal early next month.

“It can drop even further but mills are low on stocks... prices could come under pressure in September,” he said.

“The new harvest has started coming in from middle of July and is expected to continue till mid-September... initial estimates suggest that production could be over 85 lakh bales this year. We expect prices to stabilise at ₹5,000-5,500 a quintal by August this year, which is almost similar to last year,” Gupta told BusinessLine.

However, a trade analyst felt that jute prices could drop below the current year’s MSP of ₹4,500 a quintal.

Area under jute to go up in Bengal

Indian jute cultivation is primarily concentrated in West Bengal, Bihar and Assam. Bengal leads with nearly 80 per cent of jute acreage and 83 per cent of production, followed by Assam with a production share of around eight per cent.

Increase in acreage

According to estimates, there has been a 20 per cent expansion in jute sowing area this year as farmers were enthused by the high prices last season. The sowing acreage, which had dropped to 6.5 lakh hectare in 2020-21, is estimated to have increased to around 7.5 lakh hectare this season.

In 2020-21, production was lower at around 55 lakh bales, against the average 65-70 lakh bales, due to poor weather and migration to crops such as maize. The lower production left the industry with very little carry-over stock this year.

The Commission for Agricultural Costs and Prices (CACP), in its ‘Price Policy for Jute: 2021-22 season’, has recommended fixing the MSP of raw jute (TDN3, equivalent of TD5) for 2021-22 at ₹4,500 a quintal, which is 6.5 per cent higher (₹4,225 a quintal) than last season.

Steady demand

Mills, which had been operating at 50-60 per cent of their capacity till recently due to lower availability of jute and the lockdown in response to the second wave of the Covid pandemic, have ramped up production with increased arrival of raw jute. Harvesting of raw jute starts mid-July and continues upto mid-September.

“Some of the mills that had closed down have now resumed operations and there has been a capacity ramp-up at most mills. The demand is good and mill consumption is estimated to be close to 70-72 lakh bales this year,” Gupta said.

Mills working at lower capacity had led to a backlog in meeting the demand for BT will to package foodgrains. The improved availability of raw jute will help meet the backlog, Murarka said, adding it could help stabilise prices.

With inputs from Subramani Ra Mancombu, Chennai

Published on July 27, 2021

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