IJMA Has Urged The Centre To Exempt From Future Trading

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.

Jute Futures On MCX Set For Correction

Mumbai: The jute futures on MCX, which rallied for the past few weeks on lower production estimates, are all set for a correction. In the last ten days, jute for June delivery on MCX has rallied from Rs 1,562 to Rs 1,621 a quintal on Saturday.

“Although the overall bullish trend remains, prices are likely to take some correction due to lack of buying support at higher levels,” said Veeresh Hiremath, research analyst, Karvy Commodities.

Prices may come down by Rs 50-60 in the futures trade due to long liquidation before the near-month contract expires on April 30, he said. Currently spot prices are quoting around Rs 1,400 (TD-4) in spot markets of West Bengal.

According to trade estimates, output is likely to come down to 75-80 lakh bales (180 kgs a bale) from 103.49 bales logged last year. Carry forward stocks are likely to be around 20-22 lakh bales by end of season. The area under jute cultivation is lagging as farmers have shifted to other commercial crops, said an analyst.

Government increased minimum support price (MSP) for Jute (TD 5) to Rs 1,250 a bale for 2008-09 effective from July 2008.

Usually, sowing is done between February and April. Depending on the rainfall, harvest starts in June and continues till September. For getting a good combination of fibre quality and yield, about 120 days after sowing is found to be the optimum time for harvesting. Sowing in the eastern region is almost complete.

Jute is the most important cash crop, industrial raw material and the biggest foreign exchange earner in India and Bangladesh. It is among the least expensive and most versatile of textile annual fibre crop.

Jeera may gain

The concerns over crop damage in Syria and Turkey — major jeera producers — may push up jeera futures on NCDEX further. Forecast of strong wind coupled with heavy rainfall in parts of Rajasthan may damage the crop, particularly at the harvesting stage.

In the last one week, the May contract on NCDEX has gained Rs 173 to Rs 8,817 a quintal on Friday. Similarly, the July delivery moved up by Rs 113 to Rs 9,051 in the same period.

Arrivals in the Unjha spot markets have slowed down in last few days to 16,000 bags from 20,000 bags earlier. It will fall further as farmers have adopted a wait-and-watch policy with the recent Syria development, said a trader. “Buy futures at Rs 8,700 with a target of Rs 9,086,” said Ventura Commodities Ltd.

Jute Crop Size Pegged Lower At 97 Lakh Bales

The size of the 2007-08 jute crop has officially been pegged at 97 lakh bales (of 180 kg each). This follows a meeting of the Jute Advisory Board that was held here under the chairmanship of the Jute Commissioner, Binod Kispotta.

The size of the 2007-08 jute crop has officially been pegged at 97 lakh bales (of 180 kg each). This follows a meeting of the Jute Advisory Board that was held here under the chairmanship of the Jute Commissioner, Binod Kispotta.

The size of the crop during 2006-07 jute year (July-June) was pegged at 100 lakh bales. The stock carried forward to the current jute year 2007-08 was 23 lakh bales. Import of jute from Bangladesh in the current jute year was eight lakh bales. As such, the total raw jute available in the 2007-08 jute year was 128 lakh bales.

Consumption by mills

According to sources, raw jute consumption by the mills sector was around 68 lakh bales till end-February 2008. The sources said if raw jute consumption by jute mills till June 2008 continued to follow the same pattern as hitherto, raw jute consumption by the mills sector in the 2007-08 jute year would be around 95 lakh bales.

With another nine lakh bales being consumed by the domestic sector and other industries, the total consumption in the current jute year is estimated to be around 104 lakh bales. Thus, the carry forward stock to the 2008-09 jute year is expected to be around 24 lakh bales.

Mixed trend in prices

Meanwhile, the price movement of raw jute in Kolkata has witnessed a seesaw trend this jute year. The benchmark TD4 grade of raw jute was quoted at the Jute Balers’ Association here at Rs 1,130 per quintal in the second week of July 2007. It went up to Rs 1,170 per quintal on October 5, 2007, and further up to Rs 1,250 per quintal in December 2007.

Thereafter, the price of the TD4 grade of raw jute in the Kolkata market went down to Rs 1,170 at one point of time in January 2008. On February 15, 2008, the TD grade was quoted at Rs 1,180 per quintal. Currently, it is quoted at Rs 1,355 per quintal at the Jute Balers’ Association here.

Sources in the raw jute trade attributed the fall in the price of the golden fibre in January-February this year to “more-than-normal” imports from Bangladesh. They said that eight lakh bales of raw jute have been imported from Bangladesh in the current jute year. Normally, imports from Bangladesh are of the order of four lakh bales every year.

Prices Of Raw Jute, Jute Goods Decline

Kolkata: Prices of raw jute and jute goods have fallen in the local market here following duty-free imports from Bangladesh. Run-up to Budget 2008-09

The benchmark TD4 grade of raw jute, which found takers at Rs 1,250 per quintal in December 2007, slipped to a level of Rs 1,170 per quintal at one point of time in January this year. On February 15, 2008, the TD4 grade of raw jute was quoted at Rs 1,180 per quintal at the Jute Balers’ Association here.

The Centre, in a notification issued on December 31, 2007, had withdrawn the import duty on several items, including raw jute and jute goods, on imports of the same from Bangladesh, Bhutan, Maldives and Nepal. Till December 31, 2007, the effective customs duty on imports of raw jute and other jute goods was 6.88 per cent and 9.63 per cent, respectively.

According to informed sources, raw jute production and consumption in India has generally hovered around 100 lakh bales (each bale is 180 kg) annually. Bangladesh produces 40-45 lakh bales every year. Of this, nearly 25-30 lakh bales are exported to countries in the Gulf and Europe, besides Pakistan and India. Generally, India imports 5-6 lakh bales of good quality raw jute from Bangladesh every year. Besides, some quantity of raw jute is also smuggled through border routes.

Golden fibre

With the import duty on raw jute and jute goods abolished, an increased quantity of the golden fibre is likely to be imported from Bangladesh now, say sources in the raw jute trade.

According to them, seven lakh bales of raw jute have already been imported from Bangladesh and another 1-2 lakh bales were likely to come in by March-end this year. In 2006-07, 94,363 tonnes of raw jute and 60,932 tonnes of jute goods were imported from Bangladesh through the Petrapole border in West Bengal.

The sources said Indian traders who import sacking and yarn from Bangladesh are now finding these goods cheaper by about 10 per cent.

However, the quality of the jute bags imported from Bangladesh was suspect as they do now always conform to prescribed batching oil content as also quality standards specified by the Bureau of Industrial Standards.