Guar seeds in volatile zone

The futures trading of cluster beans or guarseed has been witnessing extreme volatility with a phenomenal rise in the open interest and volumes on the commodity exchanges over the last month. This has been despite a projection of a healthy crop after a revival of the monsoon.

"With constant selling at a higher level, the open interest has shot up and the prices are being maintained at a higher level," said Kashyap Pujara, vice-president, Susheel Finance, a brokerage firm that also deals in commodities.

He added that prices initially soared in July due to the delayed monsoon.

However, on a fundamental basis, the low activity in the spot market and in the export sector currently would lead to a fall in prices with the rains and the fresh arrival of crop at the end of the kharif season.

Recent data shows that the total sowing in Rajasthan for Guarseed is over an area of 5,41,282 hectare and the acreage is further expected to touch 8, 59,000 hectare by September.

On the National Commodities and Derivatives Exchange of India (NCDEX) where the commodity has witnessed the strongest trading, the August contract was very active in the last week of July.

On July 29 it traded with a volume of 50290 tonne and an open interest of 30200 tonne at Rs 1574 and a turnover of Rs 8065.44. lakh and on July 30 it traded at Rs 1479 with a volume of 45170 tonne and an open interest of 27880 tonne.

On the delivery date August 20, the contract closed trade at Rs 1402 at a volume of 14610 tonne and an open interest of 17840 tonne.

Even the October contract witnessed robust trading. On August 25, the October contract witnessed an open interest of 35500 tonne with a volume of 41630 tonne traded at Rs 1536 and a total turnover of Rs 6383.87 lakh.

The total daily market of guarseed in India is about 800 metric tonne (MT), of which 400 MT comes from Jodhpur. In the futures market, almost two lakh metric tonne on an average is traded on a daily basis.

Sources tracking the market revealed that there is still roughly 30,000 MT of guar stock waiting to be cleared.