FMC scraps 10 per cent special margin on guarseed/gum futures

NEW DELHI: Amid fall in prices, the regulator FMC has removed the special margin of 10 per cent effective today on all existing and yet to be launched guar seed and guar gum futures contracts traded on national bourses.

With the scrapping of the special margin on guarseed and guargum, the total margin money required to be deposited by traders has reduced to 20 per cent of value of the commodity.

In a directive to national commodity bourses, Forward Markets Commission (FMC) said: "In view of the recent trends in prices of guarseed and guargum contracts, the Commission has decided to remove the existing special margin of 10 per cent on long side (buyer) of all running and yet to be launched contracts."

The revision in margin will be effective today, it added. The special margin was imposed on September 11 when prices of guarseed rose to as high as Rs 7500 per quintal level. Now, the prices have come down and rule around Rs 5,000 per quintal, analysts said.

Guarseed and guargum, which is increasingly used in oil and gas industry, are being traded on five national bourses - NCDEX, MCX, ICEX, UCX and ACE.

"Guarseed prices are slowing falling with the arrival of new crop, which is estimated higher than last year," said Harish Gallipelli, who heads commodities and currency derivatives section at brokerage firm JRG Wealth Management.

Guarseed production is projected higher at 20.5 lakh tonnes this year, against 18 lakh tonnes in 2012-13, as high prices during the sowing period attracted new farmers towards guar cultivation, he added.

Guargum output is normally around 6-7 lakh tonnes a year and a substantial quantity is exported to the US, Europe and others countries.