Supply pressure dents guarseed prices

Continuous arrivals of guarseed in the physical market is taking its toll on prices, with marketmen expecting the trend to continue over the next two weeks.

"Currently, in Rajasthan and Haryana there is an average arrival of 1 lakh bags (each of one quintal) everyday. This is keeping the prices down," said Sanjay Perival, a Bikaner-based trader.

The immediate effect of the supply pressure can be seen in the price movement both in the futures as well as the spot markets.

The spot rates in the last one week in Bikaner's mandis have slipped by over Rs 100 a quintal to Rs 1,600-1,620 a quintal.

The near month futures on the National Commodity and Derivatives Exchange (NCDEX) during the same period fell 6.8 per cent to Rs 1,635 a quintal against Rs 1,753 a quintal.

So far, arrivals were seen mainly from the northwestern part of Rajasthan, comprising Sriganganagar and Hanumangarh, and Haryana. Sources said that around 70-80 per cent of the harvest was already complete in this belt.

According to commodity analysts, the next 4-5 days could see arrivals starting from the western part of Rajasthan. Regions such as Jaisalmer, Barmer, Jodhpur and Bikaner will be the main suppliers, followed by the central part of the state.

According to trading soures, domestic demand came mainly from stockists. On the exports front, the strengthening rupee is affecting guarseed exports.

"With 70 per cent of the total produce exported, the appreciating rupee is making exports very dearer (less profitable)," said Perival.

Though the October-January period is the peak season for exports, so far this year, the indications have not been very strong. But analysts added that there was demand for good quality guarseed in the market.

The team from the European Union (EU), which came to India to inspect the quality of guarseed and surveyed the guarseed growing regions of Rajasthan last month, was yet to submit its report, sources said.

The marketmen, however, do not expect a firm rally in the coming days. "Bullish sentiments are not very strong in the guar market. Till January, the market is expected to remain between Rs 1,600 and Rs 1,800 a quintal," said a Jodhpur-based trader.

Over a month back, the prices of guarseed had surpassed the Rs 1,800 a quintal mark. Reports then suggested a fall in production. While commodity analysts expect an overall production of around 75-80 lakh bags, market estimates suggest a figure of not less than 90 lakh bags.

Haryana, the second-largest guarseed producing state, had increased the acreage under guarseed cultivation this year and the market was expecting a good crop from the state. However, analysts said the untimely rainfall could contribute to the less than expected yield and result in a decline in production.

In the last seven trading sessions on NCDEX, the contract for December delivery, like that of the near month futures, slipped around 7 per cent, from Rs 1,796 a quintal to Rs 1,671 a quintal. On Thursday, the near month contract closed at Rs 1,653 a quintal against Rs 1,635 a quintal, up 1.1 per cent.