| The Ahmedabad-based National Multi-Commodity Exchange (NMCE) and Mumbai-based National Commodity & Derivatives Exchange (Ncdex) have suspended jute contracts from today onwards, industry sources said.
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| The decision has come following the Jute Commissioner's recent order of fixing prices for various grades of raw jute, in line with the industry's long-term demand. As per the notification, no dealer or trader would sell or purchase raw jute at a price exceeding the prices announced.
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| Following this order, the exchanges have suspended the contract, as per the advice of commodity market regulator Forward Markets Commission (FMC).
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| While the NMCE contracts were unavailable to trade at opening itself, Ncdex futures traded today but will be unavailable to trade from tomorrow onwards. NMCE contracts are more popular among jute traders.
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| "We received the circular from Jute Commissioner yesterday evening and in its wake, we decided to immediately suspend jute contracts on NMCE, in line with FMC's advice," said NMCE managing director Kailash Gupta.
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| NMCE's December contract was due for expiry today (November 15) while Ncdex December futures is due for expiry on November 20.
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| With respect to the settlement of the current contract, Gupta said, "Though there was no trading today, we will settle it. Delivery is also not an issue as till date, all jute contracts have been settled by monetary differences."
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| However, NMCE is yet to ascertain what it will do with respect to the January, February and March contracts which have been suspended mid-way. On this, Gupta said, "We will review the matter in a day or two. There is the risk of open interest positions in these contracts which needs consideration. We will arrive at some decision, in consultation with the FMC on this."
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| Ncdex has also, as per the advice of FMC, suspended trading in jute contracts after today's closing, confirmed the exchange's chief business officer Narendra Gupta.
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| Both the exchanges are also contemplating working with the government department associated with commodity futures (Department of Consumer Affairs) in its effort to help Union Ministry of Textiles (which governs Jute Commission) understand the relevance of commodities futures in the current market scenario.
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| Futures market supporters feel that putting a price cap on a commodity will hurt price discovery process.
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| Jute industry feels that while prices of jute products, at large, are seen at an all-time high, those of jute remain low and this is hurting the sector's growth.
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| The reason behind this was hoarding of crop by a group of stockists and traders, looking for benefits on the futures by creating an artificial demand-supply mismatch. Wednesday, raw jute futures ended lower as most market players felt prices will slip due to the price cap announced by Jute Commissioner last week.
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| Another section of the market, however, dissuades weakness in prices following a likely demand from government orders. Government is likely to order jute for bags required to stock the harvest, likely to be bumper, from the ongoing rabi season (October-March).
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| Wednesday, NMCE December contract ended marginally lower at Rs 1,520 per 100 kilograms. Ncdex December futures ended the day at Rs 1,522 per 100 kg, down Rs 9. Spot price of raw jute was Rs 1,526 per 100 kg, up Rs 3 from the previous close. |
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