Jute Futures on MCX platform

Finally, raw jute has also made its entry into MCX platform. According to the commodity exchange, raw jute Futures trading will go live on the MCX platform from July 31.

With the new season beginning in August-September, the MCX jute Futures contract is likely to help the industry lock in a raw jute price for hedging.

With close to 75 mills in the eastern region, the Rs 3,000-crore (Rs 30-billion) jute industry is looking for another opportunity to trade in forwards.

MCX would be the fourth commodity exchange to try the raw jute Futures in an organised forward trading platform. Currently, all other exchanges that have tried out forward and Futures trading in jute -- including East India Jute and Hessian Exchange, NCDEX and NMCE -- are all illiquid. As required by market regulator FMC, the contract will have a physical delivery option as well.

Delivery centres would be located in the vicinity of Kolkata, as most of the jute consuming mills are

in and around that metro. MCX warehousing and supply chain arm National Bulk Handling is expected to handle the physical delivery after the contract matures.

Though MCX is interested to launch the TD-4 variety of raw jute (like other exchanges), quality norms will be different in respect of fibre strength, colour and moisture content.

Besides, the exchange will incorporate different jute growing districts in the state to arrive at the spot price for daily reference and final settlement.

Requests to begin trading in raw jute Futures have come from far away jute producing districts like Dhubri in Assam and Purnea in Bihar, which may be considered later.

This year, raw jute production is estimated at 107 lakh bales. Since jute mills were on strike for about two months earlier this year, raw jute prices came down by about 10 per cent in recent times. With an opening stock of 120 lakh bales for the 2007-08 season, no shortage for raw jute is expected during this period.