Raw jute supply set to improve as balers asked to comply with stock limit order

Jute mills can heave a sigh of relief with at least 12-15 lakh bales of the raw material likely to hit the market after the Calcutta High Court asked balers to abide by the sector regulator's directive to stock up to a maximum of 500 quintals from the previous level of 1,500 quintals, industry sources said.

It will also help millers to help meet the target of gunny bags for food packaging which is facing a huge shortage of over 2.5 lakh bales, they said.

The 500 quintals stock order was issued by the Jute Commissioner's office in early November after the price of the commodity had soared to over Rs 6,000 per quintal as against the MSP (minimum support price) of Rs 4,225.

The jute regulator has been asked by the court to consider allowing extension of time, if applied by the stockists, without taking any coercive action.

However, the Jute Commissioner's office will be free to take action after the extension period is over, the court said.

"We will offer an extension but it will depend on the situation after our review, and receipt of their application within seven days as directed by the court," Jute Commissioner Moloy Chandan Chakravortty said.

The Jute Balers Association (JBA) had approached the court challenging the order of the Jute Commissioner's office, saying operating with 500 quintals was not feasible, and had also suspended trading activities of the commodity.

According to estimates by jute mills and jute regulator stockists, traders were expected to be holding anywhere between 20 and 24 lakh bales of raw jute.

Despite the JCs order and requests from the state government, the situation had not improved much with raw jute price remaining high at close to Rs 6000 a qunital.

"This direction will help the weak jute mills the most. The financially strong mills have almost reached their capped stock of three months of order," sources told PTI.

Four mills have already closed down because of shortage of raw jute and there is a likelihood of the closure of more mills if prices do not come down, mill sources said.

"We expect 10-15 lakh bales of raw jute to be diluted by the stockists, balers and traders. Earlier, balers were supplying only to cash rice mills and avoiding weak mills," they said.

Jute mills consume about 5.5-6 lakh bales of the golden fibre per month.