Raw jute prices hit a record high of around Tk 3,000 per maund as supply declined in the markets of producing regions owing to stocking by middlemen and slow release by farmers seeking to cash in on flood-induced production fall, various traders said yesterday.
The finest grade of the natural fibre, used by local mills to make yarn mainly for export, traded at Tk 2,800 per maund a week ago.
Since then, prices have shot up to Tk 3,000 per maund as availability fell in the markets, said Prabir Saha, a jute trader at Madhukhali of Faridpur, one of the biggest jute producing districts.
“These are the highest prices I have ever seen. Farmers are benefiting from the spiralling prices. A section of middlemen, particularly those who do stocking business seasonally, are also profiting from the high prices,” he said over the phone yesterday.
Prices of jute started increasing since the beginning of harvest early last month as recurrent floods and unfavourable weather damaged yields.
After losses, total jute acreage stood at 7 lakh hectares this season and farmers bagged 72.86 lakh bales.
Yet jute millers think that overall yield would be much lower.
Taking into account flood related crop losses and untimely sowing, overall production will be 55 lakh bales this year, said spinners and millers.
The annual requirement of raw jute is 65 lakh bales, of which 60 lakh bales is consumed by mills to make yarn, sacks, bags and twine.
The rest is used by households, said the Bangladesh Jute Spinners Association (BJSA) and Bangladesh Jute Mills Association (BJMA).
Earlier this week, millers in a joint letter to the prime minister cited the issue of shortfall from requirement and raised concerns over the increasing prices of raw jute.
“Current prices of raw jute are at Tk 2,900-Tk 3,000 per maund. Prices are increasing every week. This was never seen before,” read the letter.
It urged for imposing export duty of $250 per tonne to discourage the export of raw jute and increasing availability in the local market.
Millers said the deficit amount in the domestic requirement had widened because of exports.
The latest data on the quantity of raw jute export is not available but the Export Promotion Bureau showed that raw jute exporters earned 38 per cent higher year-on-year to $20 million in the July-August period of the current fiscal year from that a year ago.
Abdul Quayyum, secretary general of the Bangladesh Jute Association (BJA), said more than 100,000 bales of raw jute might be exported in the July-September period this year.
The BJA earlier opposed the millers and urged the government not to impose any duty on raw jute exports, saying that the requirement of the fibre reduced this year because of closure of 25 state-run jute mills from July.
“Farmers will feel encouraged to produce more if high prices persist,” said Quayyum.
Jute millers, however, said prices of raw jute should be kept steady to prevent the closure of mills, which employ nearly two lakh workers.
In the letter to the prime minister, millers said farmers would be deprived of prices if mills were to shut down for a shortage of raw materials resulting from higher prices.
“It has come to notice that stockists have stored raw jute to make high profit. If the trend continues, many mills may shut down,” said the letter signed by BJSA and BJMA chairmen Md Zahid Miah and Mohammed Mahbubur Rahman Patwari.
Both the associations urged the government to stop traders without licences from taking part in raw jute trading.
They also demanded that the government ensure that authorised jute traders and stockists do not hold more than 1,000 maunds of raw jute for over one month.
Md Shahid Hossain Dulal, owner of Progress International, an exporter and supplier of raw jute to mills, said most of the raw jute were now under the possession of middlemen.
“It is a huge crisis in the jute market. Prices of all categories of jute have gone up to extremely high levels. Jute is there and one can get it if he pays the price sought by traders,” he said.
Contacted over the phone, Textiles and Jute Secretary Lokman Hossain Miah did not want to comment on the soaring prices and opposing stance of raw jute exporters and millers.