Raw jute prices to drop further on higher crop, poor quality

Raw jute prices have declined since the beginning of the harvesting season due to higher production and relatively inferior crop quality. Prices have dropped by nearly 17 per cent at ₹6,000 a quintal at present as compared with ₹7,200 a quintal same time last year. Prices have come down by almost three per cent over the last two months as compared with ₹6,200 a quintal at the end of July.

According to Raghav Gupta, Chairman, Indian Jute Mills Association, raw jute production has been robust this year and bringing down prices. The easy availability of the fibre at the current prices would enable all mills to run their operations smoothly and meet the demand for packaging and other industries. This was in stark comparison to the situation over the past two years when the poor availability of fibre had impacted operations at mills, with at least five-to-ten mills remaining closed at any point in time.  

Production of raw jute is estimated to be close to 95 lakh bales in 2022-23, up by around six-to-seven per cent as compared to 90 lakh bales in 2021-22. The carryover stock is estimated to be close to 19 lakh bales against around five lakh bales last year. Hence, the total availability of raw jute is estimated to be close to 114 lakh bales, as against 95 lakh bales last year.

 “The TD-5 grade of jute is currently fetching around ₹6,000 a quintal as against ₹7,200 a quintal same period last year. The production has been robust and though the demand for finished goods from government is little slow now, it is expected to pick up post November once the rabi procurement season begins,” Gupta told BusinessLine.

Quality of crop impacted

The country’s jute cultivation is primarily concentrated in three States — West Bengal, Bihar and Assam. Bengal accounts for nearly 80 per cent of the area under jute and 83 per cent of its production, followed by Assam with a production share of nearly 8 per cent, with Bihar making up the rest.

Over the last two years, the highly remunerative prices of raw jute encouraged farmers to go in for higher sowing covering close to 8 lakh hectares this year. However, the inclement weather conditions in jute growing areas in June and July, with flooding in North Bengal and Assam and less rainfall in South Bengal, had affected retting. This impacted the quality of crops, thereby affecting prices.

The price differential between lower-grade jute and average quality has become much steeper as the quality has got impacted, an industry insider said. “The average price differential between TD5 and TD6 is close to ₹250-300 a quintal but this time it is much steep and is close to ₹800-1000 a quintal,” he said.

The industry expects prices to drop further moving forward. “The market has been sluggish since the beginning of this harvesting season so we cannot rule out further drop in prices,” Gupta said.