After removal of special margins imposed on guar seed and guar gum, traders have again started taking fresh positions in the futures market. The margins were imposed more than a month ago to control price volatility. Prices reached unusual high levels and the relaxation in margins have not helped much in bringing these down, as fundamentals have come into play and prices are expected to go up again.
According to the direction from the regulator, National Commodity and Derivatives Exchange withdrew the 10 per cent special margin on guar seed and reduced the special margin from 10 per cent to five per cent for guar gum, effective April 4.
“Fresh demand for guar seed and gum are now coming in from the pharmaceutical industry as well as from millers,” said Ajay Kedia of Kedia Commodities. Guar seed and gum prices are expected to remain bullish in the futures market, he added.
Guar seed futures have moved up three per cent and guar gum futures gained one per cent since Saturday.
The guar seed season is nearing to an end and arrivals in spot markets have declined. Daily arrivals have reached around 15,000-20,000 bags (1 bag = 1 quintal).
Last year, at this time of the year, daily arrivals stood at 25,000-30,000 bags, which indicate a drop of 20 per cent.
The guar seed crop in 2009-2010 stood at 450,000 tonnes, compared to 800,000-900,000 tonnes in 2008-2009.
“Stockists are holding back their stocks, which is also pushing up prices of the commodity,” said a trader.
Good export demand for guar gum has led to rocketing prices, which may also result in increased acreage of guar seed this year. But the output will depend on the monsoon. The guar gum market, on the other hand, has been volatile, but strong demand for the commodity from the textile industry, as well as the crude oil exploration industry, is providing a good support for the commodity.
Some traders and exporters are said to have formed a cartel to jack up prices. There are big players in the major producing centres who are responsible for the price volatility of the commodity, an analyst said.
