Fears of crop damage fuel guar contracts

Anticipated reduction in guarseed yield this year is driving futures and spot prices, which have surged by more than 5 per cent from last week.

According to earlier crop estimates, 85 lakh bags (100 kg each) of guarseed was expected, which has now dropped to 65 lakh bags.

"Crop losses have been reported in areas of east Rajasthan across the Churu belt. Haryana too is expected to see a reduction of 5 lakh bags," said Navratan Daga, a Bikaner-based trader.

According to commodity analysts, rising temperature in the Barmer-Jodhpur-Mewar belt is taking a toll on guarseed yield.

At the same time, market sources say, there is unconventional demand in the market, which is keeping prices firm.

In Rajasthan alone, the crop is expected to be around 33 lakh bags against the estimated 38 lakh bags. Production in Haryana is expected to be around 20 lakh bags against the estimated 25 lakh bags. The country annually exports around 65 lakh bags mainly to China and Middle East. Domestic consumption is of 10 lakh bags.

According to traders in Rajasthan, there is a carryforward stock of 25-30 lakh bags of guarseed and guargum.

Last week, guarseed futures of October, November and December on the National Commodities and Derivatives Exchange had closed at Rs 1,809, Rs 1852 and Rs 1892, respectively.

All the three futures opened the week with an increase of around Rs 40 a quintal.

On Wednesday, while the near-month contract closed at Rs 1,906, up Rs 77, November and December contracts rose Rs 83 and Rs 93 per quintal respectively.