Heavy speculative volatility in agricultural futures

- Commodity Current-Jayavadan Gandhi

Agri-commodity futures have been in a very volatile mood since last week as the rain drag factor became the center of speculative ups and downs. It was the turn of many traders who could not understand the move of the speculators to suffer a loss from the sale. For example, there was no borrower of cumin futures at Rs 150 per kg. At that time, there was an air in the market that the price would be 150. And the speculators, like the rain-dragging factor in the market, suddenly picked up and the futures rose to 14 in a matter of days. Many greedy traders started selling at Rs 8 to 10 per kg per day.

The speculators took full advantage of this and spread the rumor that the cumin futures would go up to Rs. Were blown away. Now that the cumin futures have come down to Rs 120, there was an atmosphere of panic. However, as the exporter class also tasted losses in cumin futures earlier, most of the class in the market this year came in a wait-and-see position. With the big fluctuations of cumin in the market, the household has become almost non-existent. The cultivation of cumin has not started yet and it has become very controversial as the greedy class is trapped in the gamblers' move. However, there is talk that some traders have also benefited from hedging by seeing a large price gap between present and futures.

However, the demand for cumin is expected to increase in the next six months of 2021 with the opening of the festive and wedding season. Cumin exports are likely to be affected by the Taliban regime in neighboring Afghanistan. However, foreign demand for Indian cumin is likely to be supported. In the spot market of Unjha, cumin futures have been supported by higher prices, with prices of good malls hovering around Rs 500. Currently, stockists are selling more than farmers are selling.

Besides cumin, the biggest impact of the boom is being seen in the guar market. The spot market is being boosted by traders rather than futures in Guar. While guar futures were hovering around Rs 500, the bullish spot in Rajasthan is being heavily supported by 500 to 700 trades. Guar-producing areas like Barmer, Jodhpur and Bikaner in Rajasthan are expected to produce barely 40 to 50 per cent of the production. Seeing the rise of guar, farmers have stopped selling their produce. The new guar crop is expected to hit the market next October. The rise in guar gum is a source of great joy to the farming community. Traders are making a profit by taking the stock of guar lying with the trader. Although in reality guar does not have a particularly significant household.

Due to lack of rainfall, guar crop is expected to be around 5 to 20 lakh sacks in the near future. Most of the guar mills are likely to be closed due to low production of guar. However, the current lack of rainfall and the possibility of a low-stock stock of guar are still debatable in the business community. Guar has risen by 20 per cent in the last one month. However, guar futures fell to around Rs 2,000 crore, breaking the bullish trend due to continuous upper circuit.

The market for soybeans, which is above Rs 10,000, has also come down to around Rs 500. The soybean market has fallen 41 per cent in the last one week. Import duty on soybean oil has been reduced by 7.5 per cent. In contrast to the low soybean crop in the country, production is likely to increase in countries like Canada and Argentina as the weather is favorable.