Haryana showers dent guarseed tags

The price of guarseed on Multi Commodity Exchange plunged 12 per cent to Rs 1,960 a quintal on June 20 from Rs 2,206 a quintal in the first week of the month.

The slump is mainly attributed to panic selling in the wake of showers in Haryana. This monsoon-dependent crop requires moderate but frequent rains for bumper production.

However, traders are hopeful for a rebound in prices because of strong fundamentals. Factors like depletion of stock from the physical market, high millers' demand and delay in monsoons in major producing areas may push guarseed prices up to Rs 2,300 a quintal and even higher, if rains are further delayed.

At present, guarseed prices in the physical market are quoting at the Rs 2,030 a quintal level, with arrivals having dried up in major mandis of Jodhpur, the largest producing zone in Rajasthan.

The city contributes about 70 per cent of the state's total production, which is again about 70 per cent of the country's total output.

Sowing for the low rain-fed crop starts by May 15 for early harvesting in October, but the seasonal sowing lasts up to the last week of July depending on monsoons. This season, so far, only irrigation-facilitating areas have witnessed marginal sowing.

"Stockists made comfortable positions, leaving no leftovers with retailers. Therefore, availability in the spot market is at nadir today, pushing the prices up," said Jodhpur-based trader Purushottam Mundra.

The spot price of guarseed had broken the psychological barrier of Rs 2,300 a quintal, to touch Rs 2,336 a quintal in the first fortnight of May in anticipation of high rainfall and crop losses thereupon.

"We have an export commitment of about 12,000-15,000 tonne which needs to be met by July 15. So, stockists in Jodhpur are up in arm to jack up the prices further because of delay in monsoons," Mundra added.

The real trend would be clear only towards the end of July when it is likely to rain in the state, a source at Agri Watch portal said.

Today, guar seed and guar gum are volatile on futures exchanges. "Small investors will be ruined in today's highly volatile guar gum and guar seed market," a Bikaner-based trader said.

India produces about 50-55 lakh tonne of guar seed a year with Rajasthan, Gujarat, Haryana, Punjab, Madhya Pradesh and Uttar Pradesh being the major production centres.

In order to control volatility, National Commodity & Derivatives Exchange levied 10 per cent special margin on the guar seed and guar gum August contract to be applicable on all short positions with immediate effect.