Guar hits upper circuit 5 days in a row

Guar gum contracts continued the upward circuit the fifth consecutive day on Friday on strong fundamentals supported by an upbeat export demand.

The commodity is used as a thickening and binding agent in the food, textile, paper, and pharmaceutical and in the oil industry for drilling crude oil from the well. Science has not yet developed a substitute of guar gum for its special applications. 

The commodity for delivery in January and February surged to Rs 31,783 a quintal and Rs 32,272 a quintal respectively on Friday. Following the suit, guarseed also hit the upper circuit the contract for delivery set the new record price of Rs 9,604 a quintal (January), Rs 9,748 a quintal (February) and Rs 9,86 a quintal (March).

 

According to a leading Jaipur-based trader, strong fundamentals will drive the commodity to new record high this year. He forecast the price to touch Rs 40,000 at which traders are currently executing dealing in forward contracts.

Categorised as a narrow commodity with limited potential for cultivation, guar seed is produced largely in Rajasthan. It is used purely for extracting its derivatives guar gum for its use in a number of industrial applications.

Meanwhile, the Forward Markets Commission (FMC), the commodity markets regulator, is planning to raise the margin to 43 per cent from the existing 30 per cent to cool off rising prices.