Rains dampen guarseed as rates dip to record lows

The southwest monsoon has severely affected guarseed prices, which are headed for an unprecedented low this year. Both the spot and the futures markets are hit despite a strong export demand.

Reports suggest that the sowing area is on the increase and could further add to the bearish sentiments in the market. Even commodity analysts were not able to foresee a steep fall.

They were of the view that market would witness a strong support at Rs 1,640 a quintal. However, the market has already slipped below these levels.

In Bikaner, the main centre for guarseed, spot rates on Thursday was at Rs 1,590 a quintal, whereas in Jodhpur it dropped to Rs 1,630 a quintal.

"As we have good rains this year, the market is expected to tumble by another Rs 25-30 in the next few days," said Navratan Daga, a Bikaner-based trader. He added that the market was witnessing its lowest rates in the past one year.

According to analysts, the new season is set to start with a huge carry forward stock of around 30 lakh bags (each of 100 kg) against 20 lakh bags in the last year. In 2006-07, the overall production in the country was 75 lakh bags. The major export markets for guarseed are the US and China.

Sowing has started in Haryana and in parts of Rajasthan especially in the Hanumangarh-Darshan belt.

Marketmen are anticipating that the rates would be better once the rains end. "We expect the market to stabilise after a further fall of Rs 25-30. We anticipate market to be bullish once the monsoon is over," said Daga.

In 2006-07, guarseed prices did not firm up as they did in the previous season. The year saw rates hovering around highs of Rs 2,100 a quintal, which was Rs 200 lower than the previous year's.

"Because of the high prices which the market once witnessed, traders have held up stocks which will lead to accumulation of larger carry-forward stocks," said an analyst.

On the National Commodity and Derivatives Exchange (Ncdex), the near month contract during the last week saw a fall of over 4.7 per cent.

It fell to Rs 1,630 a quintal from Rs 1,711 a quintal. On the spot front, prices in Bikaner over the last one month have fallen from Rs 1,760 to Rs 1,590 - down 9.6 per cent.

On Ncdex, the July guarseed futures closed at Rs 1,605 a quintal against the previous close of Rs 1,630 a quintal.