Indian Exchange Seeks to End Guar Futures Ban Before Sowing

National Commodity and Derivatives Exchange Ltd., India’s largest bourse for farm goods, wants approval to restart guar contracts, three months after the market regulator banned trading to curb speculation.

The exchange, known as NCDEX, has asked the regulator for permission to relist guar gum and guar seed futures, Chief Executive Officer R. Ramaseshan said in an interview in Mumbai yesterday. In March, India suspended trading in guar gum, a thickening agent used in hydraulic fracturing by companies such as Halliburton Co. (HAL) to extract gas trapped in shale, after prices rallied nine-fold to a record.

Restarting guar futures may help NCDEX boost trade turnover and allow companies such as Vikas WSP Ltd. (VWSP) to hedge prices amid forecasts farmers in India, the world’s top grower and exporter, will boost planting by as much as 20 percent. Guar contracts were two of the top five traded commodities by volume on NCDEX, according to its website.

“The suspension will not keep users away,” said B.D. Agarwal, managing director of Vikas, India’s only publicly traded producer of guar gum. “Earlier if there were four or five people, now more people will come in.”

Guar gum rallied to 95,920 rupees ($1,680) per 100 kilograms on NCDEX on March 21, extending gains for a fourth year. Halliburton, the top fracking services provider, said this month a potential shortage of the gum has driven up costs more than expected.

Planting Crop

The ban on futures may be lifted and new contracts allowed as early as next month once planting of the new crop is completed, Ramesh Abhishek, chairman of the Forward Markets Commission, said June 14.

“We will wait for sowing to be done by the end of July and take a call on allowing contracts that will expire in October, which is when the new harvest will arrive,” Abhishek said. “They can be launched maybe end of July, early August.”

Farmers may sow as much as 20 percent more area under the crop from 3.5 million hectares (8.6 million acres) this year, Rajesh Kedia, a director at Jai Bharat Gum & Chemicals Ltd., the country’s second-biggest exporter of guar gum, said on April 20.

Planting of summer crops in India starts with the onset of the monsoon rains in June and harvesting begins in October.

To contact the reporters on this story: Madelene Pearson in Mumbai at mpearson1@bloomberg.net; Swansy Afonso in Mumbai at safonso2@bloomberg.net

To contact the editor responsible for this story: James Poole at jpoole4@bloomberg.net

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