Bangladesh DoJ to take measures against rising jute prices despite dwindling exports

Escalation in raw jute prices were seen in the last two months in spite of slow-moving exports, supposing that production level would drop much below last year’s level. This has put pressure on public and private mills, already under pressure for dwindling export receipts.

At present, raw jute is trading at Tk 1,600-1,800 a maund (40 kilogram) in producing regions, which is 13 percent higher than last year.

Subsequently, a section of stockists saw an opening for windfall in the off-season, hoarding most of the supply of raw jute that was made available in the past two months. Even the large farmers bought jute to make money out of stocking, said Mujib Hossain Chowdhury, a supplier of raw jute to the state-run Bangladesh Jute Mills Corporation (BJMC).

According to Chairman Humayun Khaled of BJMC, the shoot up in jute prices has increased BJMC’s woes, which is already under cash crunch. The state agency buys nearly 20 percent of the raw jute produced in a year to keep its 24 mills running. So far, it could manage only 13 percent of its procurement target of 26 lakh quintals (100kg equals one quintal) for the fiscal year. At this time last year, it bought more than 40 percent of its target.

Exports are declining and signs of increased use of jute locally are not visible either, the private mills are not buying much for lack of demand abroad and fund deficit. The industry is also sitting on large stockpiles.

Under such circumstances, there should be no reason for price spike. It appears that production has been lower but the prices were increased artificially by stocking.

Mohammed Kefayet Ullah, a director of the Department of Jute (DoJ) said that preliminary estimates suggest that production this year will be over the target of 73.68 lakh bales (1 bale equals 181 kg).

In the face of spiral, the jute and textiles ministry has directed DoJ to take action to ensure adequate supply of the natural fibre in the market. It asked DoJ for measures so that none can hold 1,000 maunds of jute more than a month. The ministry also directed DoJ to prevent traders without licences to buy and sell raw jute.

Raw jute exports slumped more than 100 percent last fiscal year to 9.84 lakh bales, according to the DoJ.
In case of processed jute, only yarn exports grew marginally but shipment of jute sacks and bags dropped as well in the last fiscal year.

According to Export Promotion Bureau, between July and September of current fiscal 2014-15, exports were down 3.94 percent in terms of value year-on-year.