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COMMITTEE ON COMMODITY PROBLEMS |
JOINT MEETING OF THE
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Rome, 7-9 December 1998 |
CURRENT SITUATION AND SHORT-TERM OUTLOOK FOR HARD FIBRES, JUTE, KENAF AND ALLIED FIBRES |
III. JUTE, KENAF AND ALLIED FIBRES
1. This note, together with a compendium of statistics (document CCP: HF 98/3-JU 98/3), has been prepared to assist delegates to review current developments and the short term outlook for production, trade and prices of sisal, jute and kenaf, abaca and coir. In addition to information on these fibres, the text and accompanying tables provide information on the synthetic materials which compete with them. Delegates will be invited to provide additional information to the meeting on the current situation in their countries and on any market and policy developments which have a bearing on the outlook for these fibres.
2. Prices of African sisal strengthened in 1998 despite some recovery in production, reflecting continuing strong demand for the fine yarns used in carpets and other woven applications. The price for UG grade of African fibre reached US$850 per tonne in the second half of 1998, only marginally below the indicative price of $860 recommended by the Intergovernmental Group on Hard Fibres at its Twenty-ninth Session in 1996. Brazilian fibre performed less well in the market, with prices of No. 3 fibre weakening from around US$600 per tonne early in the year to $580 in September and October, somewhat below the indicative level of $630. Demand for baler twine, the main outlet for this fibre, continued to weaken and the supply of fibre remained abundant.
3. The demand for sisal baler twine in Europe was curtailed in 1998 by intensified competition from synthetic twine. Sales in Europe particularly were further limited by a poor haymaking season. These factors outweighed any positive effects on the market which may have been expected to result from the reduction in the duty applied by the European Community to imports of sisal twine, applicable mainly to shipments from Brazil, from 25 to 12 percent in November 1997. The baler twine market in the United States, however, has remained somewhat stronger than in Europe.
4. World production of sisal rose slightly in 1998 to an estimated 250 000 tonnes. In Tanzania, particularly, the completion of privatization of the former Tanzanian Sisal Authority has stimulated investment in rehabilitation and replanting, which is expected to further boost production in coming years. Some increase in production also occurred in Kenya, but in Brazil the crop was lower.
5. Exports of sisal fibre and manufactures recovered a little in 1998, with increased shipments of both fibre and cordage from East Africa, more than offsetting a contraction from Brazil.
6. A mild recovery in world export prices of raw jute in 1998 reflected the prospects for a smaller crop in the 1998/99 season. Prices of BWD grade of fibre from Bangladesh ports rose from US$240 in February, their lowest since December 1994, to US$280 in October 1998. The average for the 1997/98 season at US$257.80 remained more than 30 percent below the level of the previous season and well below the floor of the indicative price range of US$450 + US$30 agreed at the Thirty-first session of the Intergovernmental Group on Jute, Kenaf and Allied Fibres in November 1997. Export prices of some jute products particularly from Bangladesh also showed signs of recovery in the early months of the current season.
7. The estimated world production of jute, kenaf and allied fibres declined by about 23 percent in 1998/99 from the peak levels of the previous season. Low prices at the time of sowing of the crop induced a reduction in the area cultivated, and the effect of this was compounded by flooding in the major jute producing countries at the time of harvest. The area sown to jute in Bangladesh and India, the two major producers was 31 and 10 percent lower respectively than the previous season. Production in Bangladesh fell by 42 percent and that of India by about 15 percent. Production in Thailand remained at around its year earlier level, while the crop in China declined by about 20 percent.
8. World exports of jute, kenaf and allied fibres increased by some 18 percent in 1997/98 and were at their highest level since 1990. China imported around 180 000 tonnes in 1998, making it the dominant importer for the second consecutive year. A reduction in domestic supply because of flood damage contributed to this large intake. Pakistan imported 80 000 tonnes, the same as in the previous season, while African countries took advantage of the low prices and increased their purchases.
9. The high level of fibre production in 1997/98 led to an accumulation of stocks during the season, despite a rise in mill consumption. Total stocks increased by more than a third to a level which was equivalent to 38 percent of mill consumption, compared to 27 percent in the previous season. Stocks of fibre in Bangladesh were at their highest since 1990 and those of India increased by 20 percent. Total mill consumption in the major producing countries increased by 5 percent in 1997/98 to 2.3 million tonnes, of which India accounted for a record amount of nearly 1.7 million tonnes, about half of the total world's output.
10. World exports of jute, kenaf and allied fibres could fall in 1998/99 from the high level of the previous season. Export prices of raw jute are, however, unlikely to improve significantly in the near future due to the high level of carryover stocks.
11. A decline in export prices of abaca, apparent since early 1997, continued through August 1998 reflecting the devaluation of the Philippine peso and an increase in supply in 1998. The indicator price (the average of the three grades, S2, G and JK) declined during this period from US$170 per bale in January 1997 to US$127 per bale in October 1998, just below at the lower limit of the indicative price range of US$128 to $185 recommended by the Intergovernmental Group on Hard Fibres in September 1996.
12. World production of abaca in 1998 increased by about 7 000 tonnes to 84 000 tonnes. Production in the Philippines, the single largest producing country, increased by some 9 percent to 72 500 tonnes, and production in Ecuador also expanded.
13. World exports of abaca (fibre plus manufactures, in fibre equivalent terms) increased in 1998 to around 75 000 tonnes in line with production. Shipments of fibre have remained fairly flat, while those of pulp, handicrafts and cordage showed some growth. Declines in exports to Europe were offset by expanded shipments to Japan as well as the United States.
14. Production both of brown coir fibre and coir yarn have continued to increase, dominated, in each case, by production largely for domestic consumption in India. Global brown fibre production reached about 217 000 tonnes in 1997, and has increased further in 1998. Production of brown fibre increased in Sri Lanka in 1997 and 1998, in a reversal of the previous trend. Production of coir yarn, almost entirely in India, reached 228 000 tonnes in 1997 and appears to have expanded further in 1998.
15. World exports of coir fibre, dominated by Sri Lanka, recovered a little in 1998 to about 60 000 tonnes but remained below the level of earlier years. Exports of coir yarn increased in 1998 to over 21 000 tonnes, but at this level they have just returned to the level of the early nineties.
16. Prices of polypropylene polymer, the raw material for synthetic products competing against natural non-apparel fibres, dropped sharply during 1998 in response to weakened demand for many applications, coupled with low oil prices. The quotation for raffia grade polypropylene in western Europe in the third quarter of 1998 at US$586 per tonne, was 22 percent below its level in the first quarter. The lower prices of polypropylene made jute less competitive, despite a decline in its own price. Sisal also lost competitiveness in its baler twine market, as the price of polypropylene twine weakened, particularly in Europe.