Futures trade in guar begins under vigil

After being delisted for about 13 months, futures trade in guar seeds and gum got underway on Tuesday, under the vigil of the Forward Markets Commission (FMC) and exchanges.

In March 2012, FMC had banned futures trade in these commodities, owing to a sharp rise in prices.

Guar seed trading volume on NCDEX stood at 5,664 tonnes, with open interest of 2,137 tonnes and traded value of Rs 53.76 crore; guar gum saw trading volume of 1,014 tonnes, open interest of 237 tonnes and traded value of Rs 28.6 crore, the exchange said in a press release. However, as all the farmers came to sell their seeds on the exchange, anticipating better prices, prices fell four per cent, leading to trading being frozen.

FMC Chairman Ramesh Aabhishek said, "We are vigilant for guar trading and we have asked exchanges to get information of physical stocks of clients when their position limits exceed 75 per cent. Members would also have to ensure their clients provide the source of funds used in guar trading, whenever asked by exchanges."

Meanwhile, shares of BSE-listed Vikas WSP, a listed guar gum powder manufacturer, rose 20 per cent to Rs 29 a share on Tuesday, owing to the relaunch of futures trading of guar gum and seeds on commodity exchanges. An industry veteran said Vikas WSP was a major guar company, with sizable stocks of guar seeds.

FMC has proposed stringent conditions for futures trade in guar gum and seeds. The initial margin would be 10 per cent; it would increase with an increase in the price. FMC has allowed only staggered delivery on expiry. It said exchanges had commissioned studies by independent agencies. According to these studies, 50-60 per cent of guar seed stocks were with the farmers, who were waiting for futures trade to begin so that they could get better prices for their produce.

Last year, total guar seed production stood at about 180 million bags (of 100 kg each). At the Jodhpur spot market, guar gum is currently priced at Rs 28,000 a quintal, while guar seed is priced at Rs 9,500 a quintal.

On Tuesday, on MCX, guar seed for June delivery fell two per cent to Rs 9,505 a quintal, while guar gum for June delivery declined 2.6 per cent to Rs 28,050 a quintal. On NCDEX, guar seed for June delivery closed at Rs 9,460 a quintal, while guar gum for June delivery closed at Rs 28,150 a quintal.

FMC has allowed guar trading in June and July, after which it would resume in October. Trading would not be allowed in the lean months of August and September, owing to a shortage during that period.