Raw Jute Prices Fall 5-7 % Due to Rise in Production & Good Arrivals

Kolkata Raw jute prices have fallen by five to seven percent in the last month due to an expected increase in production and good arrivals. Prices were currently hovering around Rs 6,200 per quintal, down from Rs 6,500 a month ago.

Jute output is expected to be six to seven percent higher in 2022-23, at around 95 lakh bales, compared to close to 90 lakh bales last year. The carryover stock for this year is expected to be around 19 lakh bales, up from 5 lakh bales last year. Total availability is expected to be close to 114 lakh bales, up from 95 lakh bales last year.

Farmers have increased their sowing this year, covering nearly 8 lakh hectares, encouraged by the highly profitable raw jute prices over the last two years. In June and July, however, inclement weather prevailed in jute-growing areas, with flooding in North Bengal and Assam and less rainfall in South Bengal affecting retting.

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

Despite higher production of the fibre in 2021-22 due to low carryover stock, raw jute prices were close to Rs 7,000-7,200 per quintal in April-May of this year. As a result, the Jute Commissioner set the price of jute at Rs 6,500 per quintal for 2021-22 until June 30, 2022 in a notification dated September 30, 2021. However, mills were having difficulty obtaining at these rates because market rates are much higher.

The Jute Commissioner's price cap of 6,500 per quintal not only caused the closure of jute mills across the country, but it also resulted in polypropylene bags meeting more than half of the demand for food grain packaging during the ongoing Rabi Marketing Season (RMS) 2022-23.

However, due to the abundant supply of raw jute this year, industrial production is expected to increase to 13 lakh tonnes, up from close to 12 lakh tonne last year, as most mills have reopened. Apart from meeting other domestic and export commitments, the industry will be able to supply anywhere between 34-36 lakh bales on government account.

The foodgrain sector's demand is expected to be around 35 lakh bales this year. As a result, an industry expert believes that the current reservations of 100% for foodgrain and 20% for sugar should be maintained.