This refers to Subir Gokarn's column "The guar gum example" (Muddy Waters, October 21). One may agree with the facts presented about guar gum production, market rates and export quantity, but the highly fluctuating scenario is a speculator's delight. Trading and financing such a volatile commodity requires close monitoring of many variables and can be a case of information asymmetry. Keeping in view the heavy fluctuation in market prices, the owners' margin can also not be decided comfortably. Warehouses holding the commodity may not be approved and their receipts financed carry many risks. Any conclusions on treating the guar gum success as a model for Indian agriculture will need to wait until satisfactory answers are found.
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Y P Issar, Karnal
Letters can be mailed, faxed or e-mailed to:
The Editor, Business Standard
Nehru House, 4 Bahadur Shah Zafar Marg
New Delhi 110 002
Fax: (011) 23720201 · E-mail: letters@bsmail.in
All letters must have a postal address and telephone number