Raw jute contracts launched

The Multi Commodity Exchange (MCX), a leading commodity exchange in the country, on Tuesday launched raw jute futures contracts of the TD-4 (Tossa) variety for Kolkata delivery.

The contracts have been launched for August, September and October. Raw jute is predominantly grown in West Bengal, Bihar and Assam.

The August, September and October contracts debuted on the MCX on Tuesday at Rs 1,189, Rs 1,210 and Rs 1,200 a quintal respectively and ended the day's session at Rs 1,217, Rs 1,246.5 and Rs 1,263 a quintal respectively.

The contracts will result in compulsory delivery on the last working day of each month. The minimum lot size is 10 tonnes deliverable in bales (1 bale = 150 kg) and the rates on the expiry day will be arrived at by taking a simple average of the last three days' spot prices from jute traders in Murshidabad, Nadia and North 24 Parganas and from brokers and millers based in Kolkata.

However, prices will be benchmarked ex-Kolkata by adding freight, market fee and brokerage. The jute contracts are unique as all earlier contracts derive the settlement price solely from the Kolkata market.

Kolkata is major jute consumption hub, with most of the mills in and around the city limits, while producing and growing centres are located in far-away districts.

The open position limit for members has been fixed at 10,000 tonnes or 20 per cent of the open market position, whichever is higher, and for clients at 5,000 tonnes throughout the lifecycle of the contracts. The daily price limit has been fixed at 4 per cent in either direction.

"West Bengal is India's largest producer of raw jute followed by Assam and Orissa. With an annual production of over 100 lakh bales in the country, we estimate good participation from producers, traders, processors and jute mills and also good open interest to meet the hedging needs of the industry," said Joseph Massey, deputy managing director, MCX.