Forward Market Commission may okay futures trade in guar gum, seed

NEW DELHI: The futures market regular, Forward Market Commission, may permit resumption of futures trading in guar seed and gum after a 45-member advisory panel meets on Tuesday to thrash out contentious issues. The FMC banned guar futures six months ago after prices rose 1000% to touch Rs 100,000 a tonne. Since then prices have dropped to Rs 20,000 a tonne.

The panel consists of commodity experts, farmers, exchange members and other stakeholders. Consumer affairs minister KV Thomas recently told ET that his ministry did not find strong evidence of speculative trading being the cause of the unprecedented price rise. “We noticed that guar prices moved up even after we banned futures trading. It was primarily due to a strong export demand. We have not found any strong evidence of speculation. However, we are still studying other aspects,” he had said.

Farmer groups are demanding resumption of guar futures since acreage has shot up this year. They want a reliable price discovery mechanism. “Farmers have invested heavily in guar cultivation this year. The government should restart guar futures so that farmers can gain from it,” wrote Confederation of Indian Farmers Association, a farmer body, to the ministry of consumer affairs.

Guar prices in the spot market are under pressure with a record harvest of 15 lakh tonne on the anvil and lower export demand. “Farmers were lured by the record prices it fetched on strong demand from the global shale oil and gas industry. But this year, export enquires have dried up as oil drilling companies have built up huge inventory,” said Purshotam Hisaria, president of the Indian Guar Gum Manufacturers Association.