MCX, NCDEX restart futures trading in guar seed, gum

Commodity exchanges Multi-Commodity Exchange of India (MCX) and NCDEX on Tuesday restarted futures trading in guar seed and guar gum contracts with the commodity markets regulator Forward Markets Commission (FMC) lifting the ban.

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The FMC has now allowed trading in guar seed and gum June, July and October 2013 contracts to facilitate price discovery and price risk management, the exchanges said. The regulator had banned guar futures in March 2013 due to price volatility.

With the contract size of 1 MT, tick size of Rs 10 per quintal and the delivery unit of 1MT, it is a compulsory delivery contract, with staggered delivery offered for the last 15 days, NCDEX said in a statement.

The basis delivery centre is Jodhpur and additional delivery centres are Bikaner, Nokha, Barmer, Sriganganagar, Deesa and Adampur, the release said. The trading unit of the guar seed and guar gum is 1 MT each and price quote for the contracts is ex-warehouse Jodhpur, inclusive of sales tax and VAT, MCX said.

"These are compulsory delivery contracts with staggered delivery tender period for the last 15 days. The physical delivery would be available in multiples of 1 MT for both guar seed and guar gum," the statement said.

"Futures trading in guar seed and guar gum can effectively provide a benchmark price for the guar industry in India, and also help the trade and industry functionaries in managing price risks on their spot and forward transactions in the domestic as well as export markets." MCX, director-business development, Sumesh Parasrampuria said.

Guar gum is extracted from guar seed, the production of which is expected to be 14 lakh tonne this year, lower than 17 lakh tonne in 2011-12. India is the world's biggest exporter of the commodity.