Guarseed, guargum prices hit by futures ban rumours

The Forward Markets Commission (FMC) denied any possibility to ban futures trade in guarseed and guargum as rumours regarding a ban spread on Wednesday morning in Rajasthan, resulting in about 5 per cent price decline in the spot and futures trade.

The commodity market regulator in a press release said, "We deny the reports appearing in certain sections of the press there is a move to ban futures trading in guarseed and guargum."

As a regulator, the FMC keeps a close vigil on the price movement in commodities on futures exchanges and any suspicious movement is immediately tackled by the regulator with the help of concerned exchanges and traders.

A section of traders in Rajasthan, Jodhpur and Bikaner to be more specific, spread the rumour by calling some friends in traders' fraternity that the futures trade in guarseed and guargum would be banned. Therefore, the price of guarseed and guargum slumped by about 5 per cent in the spot as well as the futures markets.

Prices of guarseed for near month contract declined to Rs 2,028 per quintal till early afternoon on Wednesday from the previous close of Rs 2,119.

Similarly, prices of guargum slumped to Rs 5,135 from the previous close of Rs 5,400, thus creating a lot of confusion among traders.

"Considering the sensitivity of guarseed and guargum trade on exchanges, the FMC had convened a meeting of various trade associations, federations, chambers of industry in August, wherein representatives of the Indian Guargum Manufacturers Association did not favour the prohibition of futures trade in these commodities. All stakeholders were satisfied with the transparent trading practice on exchanges," the release said.

It said that the present regulatory measures with regard to guarseed were stringent and were similar to those in sensitive commodities such as foodgrains and pulses.

Purushottam Mundra, a noted trader in Jodhpur, said that the rumour was properly planned by bears who were considering the price would come down to Rs 1,400.

But, looking at the impossibility of such a drastic decline, bears came out with a rumour which helped them bring down prices, he added.

The guarseed price recovered Rs 20 after the clarification issued by the regulator to close at Rs 2,040 in the spot Jodhpur market, still a loss of Rs 50 from the previous close.

Likewise, guargum also slipped to Rs 5,075 early on Wednesday but recovered later to close at Rs 5,150.

Guarseed and guargum is actively traded on the National Commodity & Derivatives Exchange (Ncdex) which contributes significantly to the total turnover of the exchange.