MUMBAI, 23 June 2025: No matter how smart a trader is, he should never make the mistake of considering others as fools, because in the commodity business, every trader follows his own needs and calculations and the needs of everyone sitting in the market are not the same. There is a similar situation in the guar seed and guar gum trade at present.
For the last two seasons, traders have not seen the price of guar seed per quintal above INR 6650. There is no special demand in the market. However, due to the difference in prices between the two futures contracts, those trading in calendar spreads are currently getting an interest of 12 to 14 percent. Therefore, some traders who consider an investor and makes such interest-based investments may buy Guar seeds from market. Trades those are looking these investors as a foolish are making a mistake.
It is true that the prices of guar seed and guar gum have not increased for a long time. However, there will not be a significant decline in guar seed cultivation this season. Since the monsoon has started early this time, it is reported that planting has started in the guar seed-growing areas of Rajasthan and Gujarat where there is irrigated land.
The crop of these areas will come a little earlier than the season. On the other hand, the demand from stockists is also less this time. This is the reason why the price of guar gum per quintal on April 21 was INR 10228, which fell to INR 9200 on June 17. While the price of guar seed was INR 5337 per quintal on April 21, which fell to INR 5030 on June 17.
In the year 2023-24, India's guar seed production was 9.55 lakh tonnes and in the previous season i.e. 2024-25, it is reported that a little more than 10 Lakh tonnes were produced. If the traders' calculations are correct and the rains are timely, then the production of guar seed in the next season will be 10 to 10.50 lakh tonnes.
Due to which the price may also fall in the coming days. In such a situation, farmers need to plant very wisely. Suppose that currently the price of guar seed in NCDEX futures is INR 5200 per quintal for delivery in September and October and a Put OPTIONS premium of INR 100 to 150 has to be paid for the price of INR 5400 in the put option, then farmers should book minimum profit by buying the put option at the time of sowing. Therefore, even if the price is low at the time of delivery, they will get a fair return for their hard work.
Moreover, if the price goes above INR. 5600 at the time of delivery, they will retain the right to sell guar seeds at a higher price in the spot market by forfeiting the premium. Farmers need to understand these advantages of option trading.
There was no significant difference in prices between the spot market and the futures market in the past week. The millers currently have sufficient stock of guar gum. Moreover, stockists and exporters know this fact, so instead of making new investments by stocking up, they have a mentality of buying when needed.
In the nationwide market yards, an average arrival of 4000 to 5000 sacks were recorded daily in the past week. As the rainy season sets in, the arrivals expected to decrease. The export market was expected to open after the war, but no such special purchases have been made yet. The picture of the sowing will become clear only when the planting of the next season gains momentum from July.
By Kalpesh Sheth is an commodities expert with years of experience.
