The guar complex increased by the maximum permissible limit in the futures market on Friday even as guarseed and guar gum prices vaulted to a new high.
Guarseed prices on the spot market topped Rs 20,000 a quintal at Bikaner and Rs 20,126 at Jodhpur, while guar gum spot prices zoomed to Rs 62,706 a quintal.
In the futures market, guarseed March contracts increased by the maximum four per cent to Rs 19,940 a quintal, while April contracts increased to Rs 20,206 a quintal.
Guargum March futures also increased by four per cent to Rs 63,086 a quintal, while April contracts quoted at Rs 63,922.
The irony of the guar complex rally that began in the second half of last year is that no player in the market is not sure of what is happening in the market. “We don't know what is happening in the guar complex. In fact, no one know and maybe, there is too much of speculation,” said an exporter who did not wish to be identified.
Prices of guarseed, which increased 290.85 per cent last year, have nearly trebled since the beginning of the year. On January 2, guarseed was quoted at Rs 7,051 a quintal for the near-term contract.
Prices of guargum, which zoomed by 354.61 per cent in 2011, have also increased by a similar margin during the period after the near-term contract was quoted at Rs 23,379.
Soaring exports are reported to be behind the current rally, according to sources.
According to the Agricultural and Processed Foods Export Development Authority, guargum exports between April and November during the current fiscal increased to 6.7 lakh tonnes valued at Rs 6,248.76 crore against Rs 2.28 lakh tonnes valued at Rs 1,449 crore during the same period a year ago.
“We feel there could be something wrong with the export figures. Maybe, some typographical error. We are not sure and it is one of the reasons that is forcing us to keep off the counter,” said a source.
The rally in guar complex is notwithstanding a slew of measures taken by the Forward Markets Commission (FMC) that supervises the functioning of futures markets in the country.
In fact, if anyone wants to take a position in the guar complex, he or she has to pay 60 per cent of the margin upfront in cash. Since December, the FMC has been hiking the margin regularly but it has been of no avail.
The guar complex has been rallying on speculation that guar production this season to June will be 12.1 lakh tonnes against 15 lakh tonnes last year. A crop of 12.1 lakh tonnes will result in 3.63 lakh tonnes guar gum against 4.5 lakh tonnes last year. Since guar production in 2009 was an abysmal 2.5 lakh tonnes, the carryover stock has been negligible.
Guar, a leguminous crop, is primarily grown in Rajasthan, besides Haryana, Punjab, Gujarat and Madhya Pradesh. Rajasthan accounts for 70 per cent of the crop in the country.
Guarseed is a raw material for producing guar gum. Guar gum is used as a thickening agent and additive in food products such as instant soups, sauces, processed meat products, baked goods, milk and cheese products, yoghurt and ice-creams. It has industrial applications in the paper and textile sectors, ore flotation, explosives manufacture and fracturing of oil and gas formations. India is the major producer of guarseed and gum, accounting for 80-85 per cent of the global supply.
The price rally was reported to have taken a toll on consumption, especially the food, textile and paper industries. However, despite such reports the rally continues.