New Delhi: The spot prices of guar seed and gum, used in oil exploration, skyrocketed and touched their highest rate in May 2012 due to high export demand and low production of the commodity, government said on Tuesday.
The prices of guar seed and guar gum touched their highest spot price of Rs 30,812.40 per quintal and Rs 1,06,488 per quintal, respectively, in May this year, Food Minister K V Thomas said in a written reply to Lok Sabha.
"The main reasons for price rise appear to be relatively lower production of guar seeds in 2011-12 and very high level of export demand," Thomas said.
Market analysts attributed the skyrocketing demand for guar seed and gum mainly to increasing demand from oil drillers, especially in the area of hydraulic fracturing, and to a small extent from the food processing industry.
India is the world''s biggest exporter of the commodity and accounts for 80 percent of the world's guar production. Major guar producing states in the country are Rajasthan, Gujarat and Haryana.
Guar gum exports earnings rose by more than five-fold to a whopping Rs 16,356.74 crore in the last fiscal from Rs 2,938.69 crore in 2010-11.
The volume of shipments of guar gum rose by 60 percent to 7.02 lakh tonnes in the 2011-12 fiscal as compared to 4.42 lakh tonnes in the year-ago period.
The production of guar seeds declined by 22 percent to 12.10 lakh tonnes in 2011-12 fiscal from 15.46 lakh tonnes in the year-ago period.
Thomas said the government had asked the commodity markets regulator, Forward Markets Commission (FMC), to enquire into the "unprecedented rise" in prices of guar seed and gum.
"FMC has since submitted a report, which is under consideration of the government," the minister added.
In March this year, FMC directed the commodity exchanges to close all futures contracts in guar seed and guar gum with effect from March 27, 2012.
The regulator also directed the exchanges not to launch any fresh contract of guar seed and guar gum without its prior approval.
"Though futures trading in guar complex (guar seed and guar gum) has not been banned, the FMC has not given approval for launch of any new contract," Thomas said.
To a question, the minister said the government has not proposed to announce a minimum support price (MSP) for guar.
PTI
First Published: Tuesday, August 21, 2012, 15:11