Subdued only a month ago, guar seed prices are again swelling thanks to speculative buying support. Reports of a tepid monsoon in late August playing spoilsport to the crop produce in Rajasthan has led to the buying frenzy, say analysts.Guar seed for September contracts at the National Commodities and Derivatives Exchange of India (NCDEX), which opened at Rs 1,600 per quintal levels last week shot up to the Rs 2,200-mark by Friday. Spot prices of guar seed at the Jodhpur market too have been behaving similarly climbing to Rs 2,100 levels last Friday. The guar futures and spot prices, which have been on the ascend since mid-August, surged further last week on the back of a buying frenzy.Market watchers say guar is back on the speculative radar, as many operators fear a crop failure in Rajasthan, which accounts for 75 per cent of the Indian produce. Being a rain crop, guar production is heavily dependent on water-feed. Also, supply fears are driving those sellers who sold earlier to cover their positions.Amongst the most popular products in the commodity bourses, the upswing in guar seed via speculative trading is dwarfing other commodities at the NCDEX. The Mumbai-based bourse engages in the trading of 43 commodities, of which 39 are agri-products. However, guar seed trading alone saw an average daily turnover of Rs 3,500 crore against NCDEX’s total daily turnover of Rs 5,000 crore last week, says an analyst who didn’t want to be identified. Guar seed accounting for 75 per cent of a commodity exchange’s total turnover is nothing unusual when speculators are back, added the analyst.But then guar is ‘special’. If for most commodities it is the spot market that propels futures trading, the opposite is true for guar seed, say traders.Some market watchers, however, think fundamental and technical factors might be at play this week at the bourses. ‘‘Even if the Rajasthan crop fails, the shortfall will be met by other states as Madhya Pradesh. The 3 lakh metric tones carry forward stock (the produce that is not consumed or exported) and 6 lakh metric tones expected as production this year is a decent output, enough to temper down prices to Rs 1,700 levels soon,’’ says Vineet Kumar Rai of Refco Commodities India Ltd.Not everyone agrees. Says Sushil Sinha, Manager for Commodities at Geojit Securities, ‘‘Prices are still going to be bullish. Although there is no need to panic, with the demand in the market outpacing supply, prices will continue to rise in the near future.’’ For the same reason, Sinha’s advice to traders is not to take up selling now, but to square their positions after a month or so.
