MUMBAI (Commoditiescontrol) - Guarseed surged by 8.60% to 4,608/100kg at the benchmark Jodhpur market, whereas Guargum edged higher by 9.38% due to strong buying from crushers, traders and stockists supported by increased inquiry in export amid rising crude oil prices.
Activity in the spot market is said to be robust as buyers as market players are covering the commodity due to positive fundamentals.
Oil prices settled higher on Friday after hitting three-year highs, with crude also posting a weekly gain as a weaker U.S. dollar underpinned prices. Brent posted a nearly 2.7 percent weekly gain, while WTI reached a weekly gain of 4.3 percent.
Brent crude futures settled up 10 cents, or 0.1 percent, at $70.52 per barrel after hitting a session high of $70.83. On Thursday, the contract climbed to as high as $71.28, its highest since 2014.
U.S. West Texas Intermediate (WTI) crude futures closed at $66.14 a barrel, up 63 cents, or nearly 1 percent. On Thursday, they also reached their highest since December 2014, at $66.66.
The number of active oil and gas rigs rose this week, according to Baker Hughes data, increasing by 11 total rigs. This brings the total number of oil and gas rigs to 947, which is an addition of 235 rigs year over year.
Guarseed arrivals during the week (Jan 22-25) stood at 75,000 bags (100kg each) compared with 95,500 bags previous session (Jan 15-20). Lower arrivals were attributed to truncated week due to holiday on Jan 26 for Republic Day.
According to data compiled by CC from trade sources, season arrival Oct 1, 2017 to Jan 25, 2018 stood at 34.82 lakh bags from estimated production of 50 lakh bags this season, which means 70% of crop has already been hit the market. Now the total availability of Guarseed in the country is estimated at around 115 lakh bags (including 100 lakh bags as carryover from previous crop 2016-17).
There is still 9-month time left and if the export demand continues to stretch month-on-month, then the balance sheet will be pretty tight and may rally to extend in upcoming months.
Selling by stockists and farmers are slow, and they are releasing their only as per their financial stock. They are currently liquidating old/new crop of average grade, while holding premium quality eyeing Rs 5,000 and above level ahead, said trade sources.
On derivatives, the most-active February Guarseed rose 5.37% to 4,506.50/100kg during this week on the National Commodity & Derivatives Exchange Ltd (NCDEX). Guarseed open interest decreased to 135790 lots compared with last week 152,960 lots, while volume increased 9.58% at 172,330 lots versus 157,250 lots a week earlier. At the same time open interest in March contract rose 80.94% at 35,810 lots this week.
Similarly, NCDEX Guargum February futures edged higher by 5.84% at 9,758/100kg. Open interest in the contract declined 20.72% at 57,895 lots with volume tumbling 3.63% at 32,875 lots versus 341,15 lots last week. Open interest in March contract gained 128.71% at 22,460 lots.
The rising open interest in March contract and reduction in February contract is indicating roll over of positions to forward month (March). Bullish movement is expected to continue ahead as open interest have increased along with price.
(By Commoditiescontrol Bureau; +91-22-40015533)
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