The bull run on the East India Jute & Hessian Exchange (EIJ&HE) for the August delivery continued today as the price for sacking touched a high of Rs 2137 and then finally closed at Rs 2136.50.
The price opened at Rs 2126 for 100 bags and touched an intra-day low of Rs 2121.
A director on the board of the exchange told Business Standard that the bull squeeze seems to be on and the prevailing price for sacking at Rs 2145 is higher than today's close.
Raw jute prices also increased today from Rs 1500 per tonne to Rs 1570. Industry sources said that this too may have had an impact on sacking prices.
It may be mentioned that raw jute prices was around Rs 850 in July-August 2000. "It is possible that the same bulls are jacking up raw jute prices as well," said sources.
However, demand in the physical goods market is not very strong. The market regulator Forward Markets Commission (FMC) has ratified the decision of the board of EIJ&HE to settle the outstanding positions for the May delivery at a mandated price of Rs 2110, without any member having to deliver stocks.
The board had notified FMC yesterday about the decision and sources said that settlement will take place tomorrow. The speculators had taken jute sacking off the market and simultaneously taken long positions on the bourse to shore up the price.
On May 17, prices shot up to Rs 2,130 and touched an intra-day low of Rs 2,078 in a fierce battle between bull and bear, following which the authorities suspended trading for five days. The closing price for the February clearing, incidentally, was Rs 1971.80.
Further, the traders are apprehensive that the bourse may be directed by the FMC to go online if problem persists. The general perception is that the outcry system is misused and this can be eliminated only once, online trading is introduced.
There has been pressure from FMC's side to go online but the brokers have so far resisted as it would require large investments. However, once the plan for National Commodity Exchange (NCE) comes through, EIJ&HE will be compelled to go online.
