Kolkata: The Indian Jute Mills Association (IJMA) has urged the Centre to exempt raw jute from futures trading. The IJMA has contended that futures trading in raw jute has done “more harm than good” as “unbridled speculation” has resulted in rigging the price of the commodity in the market.
The IJMA has urged the Union Ministry of Textiles to take up the matter with the Department of Consumer Affairs under the Union Ministry of Consumer Affairs, Food and Public Distribution, and urge the latter to instruct the Forward Markets Commission (under which trading in futures is conducted by various exchanges) to ban futures trading in raw jute.
In a letter addressed to the Secretary in the Union Ministry of Textiles, the Chairman of IJMA, Sanjay Kajaria, stated the Centre had imposed a ban on futures trading in raw jute in 2005-06. However, with the commencement of futures trading in raw jute by MCX from July 31, 2007, prices of raw jute rose to unprecedented levels “mainly due to speculative activities, unrelated to the demand-supply scenario”.
Stocks accumulation
As raw jute traders began to accumulate stocks in expectation of better prices in the future, floating stock of the commodity fell in the market. Jute mills, which were preparing to build up their raw material stock that they needed for supplying jute bags under mandatory packaging during the kharif season, were unable to procure raw jute. The matter was then brought to the notice of the Jute Commissioner.
Stabilisation of raw jute prices
The IJMA has stated that stabilisation of raw jute prices would help the mills sector keep its commitment pertaining to supply of B Twill bags against Government orders within stipulated time frames.
A stabilised raw jute price regime would also help in facilitating the transformation of the jute industry from being predominantly a manufacturer of packaging products to a manufacturer of diversified jute goods.
Stabilisation of raw jute prices was also important for export of jute goods, as price of the final product was a major determining factor influencing the decisions of international buyers, the IJMA stated.
The IJMA has urged the Union Ministry of Textiles to take up the matter with the Department of Consumer Affairs under the Union Ministry of Consumer Affairs, Food and Public Distribution, and urge the latter to instruct the Forward Markets Commission (under which trading in futures is conducted by various exchanges) to ban futures trading in raw jute.
In a letter addressed to the Secretary in the Union Ministry of Textiles, the Chairman of IJMA, Sanjay Kajaria, stated the Centre had imposed a ban on futures trading in raw jute in 2005-06. However, with the commencement of futures trading in raw jute by MCX from July 31, 2007, prices of raw jute rose to unprecedented levels “mainly due to speculative activities, unrelated to the demand-supply scenario”.
Stocks accumulation
As raw jute traders began to accumulate stocks in expectation of better prices in the future, floating stock of the commodity fell in the market. Jute mills, which were preparing to build up their raw material stock that they needed for supplying jute bags under mandatory packaging during the kharif season, were unable to procure raw jute. The matter was then brought to the notice of the Jute Commissioner.
Stabilisation of raw jute prices
The IJMA has stated that stabilisation of raw jute prices would help the mills sector keep its commitment pertaining to supply of B Twill bags against Government orders within stipulated time frames.
A stabilised raw jute price regime would also help in facilitating the transformation of the jute industry from being predominantly a manufacturer of packaging products to a manufacturer of diversified jute goods.
Stabilisation of raw jute prices was also important for export of jute goods, as price of the final product was a major determining factor influencing the decisions of international buyers, the IJMA stated.
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