No plans to delist guar futures, says KV Thomas

MUMBAI: The government will not delist guar futures for the time being despite an exporter lobby strongly pressing for such action in the light of the continuously mounting prices, consumer affairs minister KV Thomas told ET.

However, the minister said he had directed Forward Markets Commission (FMC), the regulator of the commodity futures market which he oversees, to present him with a report in 10 days to verify whether the exporters' demand carried merit.

"I have received a complaint only from an export organization, not from any farmer group so far," he said. "I will do anything in the farmers' interest and banning the commodity as of now is not warranted since farmers have benefited from the price rise. No members of Parliament from Rajasthan (the main grower of guar seed) have asked for a ban either.

There is a genuine increase in demand for guar, especially from oil drillers in the US, and, coupled with lower production, that is why prices are rising." His statements come amid a strong pitch for delisting the commodity by Shellac & Forest Products Export Promotion Council (Shefexil), sponsored by the commerce ministry to encourage guar gum exports. Debjani Roy, executive director of the council, told ET that a delisting of guar had been sought.

According to Ashok Mittal, CEO, Emkay Commotrade, both farmers and processors of seed had made money since their margins had gone up due to the price rise. "Only exporters who had committed earlier at a lower price are the ones affected since they have to pay more for supplying the product," he added.

FMC chairman Ramesh Abhishek was not available for comment but has been taking action against a few Rajasthan-based brokers who reportedly admitted to having transferred funds into and out of client accounts from and to non-clients while trading in guar seed and guar gum.

However, Abhishek had told ET earlier that there was no evidence to show trading irregularities were linked to market manipulation. Market rumours attribute the one-way price movement to attempts by a few brokers and corporates of cornering the product. These entities were allegedly paying brokers to trade on their behalf in the commodity.

On Saturday, guar seed and its derivative guar gum, used as a sealant by oil drillers, hit record highs of Rs 11,828 and Rs 39,118 per quintal respectively, up over 70% so far this year. The commodity shot into focus last month after breaking the upper circuit limits at a time arrivals were under way.

To curb the runaway price, FMC has successively increased the margin to be deposited for trading the commodity to 70% and reduced the near-month client limit by 20%. The FMC chief earlier said margins would continue to be increased till volatility at higher levels subsided. Shefexil admitted last year's guar seed crop at 12 lakh tonne was 20% below that in the preceding year.