Guarseed prices down 13.45 % to Rs 2008 a quintal

Prices of guarseed have sharply declined by 13.45 per cent to Rs 2,008 per quintal in just four days. On May 13, the prices stood at Rs 2,320 per quintal. According to traders, prediction of good moonson has lead to expectation of a bumper crop this year, which resulted in the fall.

Despite May contract trade coming to an end the guarseed price are in no position to see any upward movement unlike other contracts which generally move up towards the date of settlement.

May 2006 contract of guarseed will close on May 19 on both national commodities exchanges that is the Multi Commodity Exchange (MCX) and the National Commodity and Derivatives Exchange (NCDEX).

Witnessing approximately 14 per cent decline on NCDEX in the last four days, guarseed for May 2006 contract closed at Rs 2,049 per quintal on May 16 as as compared to Rs 2,416 per quintal on May 12. The cattlefeed on the MCX, however, controlled the loss to just 8 per cent within the period under review to Rs 2,177 per quintal from Rs 2,368 per quintal on May 12.

"The market is fully under speculators' control. Being a cattlefeed item the maximum price of guarseed should be between Rs 1500 and Rs 1700 per quintal. But, the price moved up on specualtive buying by a handful of traders to unexpected levels from where the decline was likely," said Sanjay Periwal, a spot guarseed trader from Bikaner.

The production of guarseed is directly related to monsoon. Rajasthan accounts for 70 per of the country's production (around 5 lakh tonne). The production cannot be predicted because of its dependency on rains hence the prices are volatile.

Other states which produce this commodity are Gujarat, Haryana, Punjab, Uttar Pradesh and Madhya Pradesh. India produces about 80 per cent of the world guarseed production and exports mainly to Arab countries, Brazil, Australia and the US.

The demand has been constant over the years but the supply has varied largely. The physical market of the commodity involves speculators and stockists. The storage period of the commodity is decided by the demand and market prices.

Guarseed sowing season has started in the area using irrigation system such as canals and tubewells but in dry areas it would start after 15 days.

"We are expecting the guarseed price to decline to Rs 1,700 per tonne but that would be possible only when there is enough rain through out the country," said Periwal.

At present, the total availability of guarseed in the country is about 60 lakh bags, equivalent to the total consumption.

Tekri-based Om Prakesh Fetehpuria, a trader dealing in spot and futures at NCDEX, said that the guarseed price was bound to decline as it had reached an imaginative level where no buyer was ready to book.The bulls' dream of below normal monsoon shattered by the recent weather forecast. Following this forecast the bulls turned bears and started selling their stocks in ancitipation of further price decline.

Guar is a rain dependent crop, which requires 8-15 inch of rain in 3-4 spells and is harvested in October - November. It is sown immediately after the first showers that is in July and harvested around November each year.It requires a relative long growing season of 20-25 weeks.