Norms cool guar on NCDEX

Trading in guarseed (cluster beans) and guar splits on the National Commodities and Derivatives Exchange (NCDEX) saw a correction after NCDEX announced more stringent delivery norms for the items.

"The penalties imposed ensured sellers who indicate an intention to deliver do not default," said Madan Sabnavis, chief economist, NCDEX.

The penalty charges for default on the sellers' side is calculated on the highest price between the settlement day, which is the 20th of every month, and the four day cut-off from the settlement day.

A 10 per cent surcharge is added to the highest final settlement price, and a minimum of 30 per cent of the penalty goes to the buyer. If a buyer refuses to take delivery, the lowest spot price between the settlement day and four subsequent days is calculated with a 10 per cent surcharge, as a penalty.

Atleast 30 per cent would go to the seller. The penalties cooled prices of guar by roughly Rs 200 on the exchange. Guarseed moved down in the past two days, from Rs 2156 on September 15 to today's close of Rs 2052 on the November contract.

Open positions declined from 64320 tonnes to 61050t, and volumes from 184110t to 69110t in the past two days.

The guar gum November contract moved from Rs 6333/t to Rs 6037/t.

Sources said speculators had dominated the market in the last two months, and many positions remained open due to constant selling at a higher level. Players sold stocks at roughly five per cent over spot and this kept prices up.

Last month, roughly 20,000t of guarseed delivery was rolled over on the benchmark November contract.

A healthy guar harvest was expected in October. August sowing in Rajasthan covered 5.4 lakh hectare. It was expected to touch 8.59 lakh hectare by September end.