BSE, one of the latest entrants in the commodity derivatives trading space, has launched futures trading in guarseed and guargum.
Capital and commodity market regulator SEBI last month allowed the exchange to launch futures trading in gold mini, guarseed and guargum futures contracts. Following this, the exchange launched trading in the two agriculture commodities guarseed and guargum.
Trading in these commodities has started with a lot size of 10 tonnes. The exchange will have contracts expiring from February to December in both the commodities.
A largely export-oriented commodity, guar gum and guar seed prices are driven by global factors. Guar gum prices are linked to crude oil prices as it is largely used in oil well drilling and other industries such as cloth and paper manufacture, explosives and ore flotation.
Guar gum is also used as a thickening and binding agent in the food, textile, paper, pharmaceutical and oil industry. Highly refined guar gum is used in the food industry as a stabiliser in ice creams cheese instant pudding and whipped cream substitutes.
NCDEX guar gum contracts logged in a turnover of ₹3,670 crore in December and ₹4,107 crore in January, while the same for guarseed was ₹7,700 crore in January and ₹7,111 crore in December.
On Wednesday, guar gum prices declined by ₹235 to ₹8,225 per quintal on the NCDEX as operators reduced their positions due to weak export demand from oil drilling industries. The most-active March contract, too, shed ₹227 to ₹8,332 a quintal.
It has to be seen whether the BSE can attract some trading volumes from the well-established agriculture commodity exchange NCDEX.
Ashishkumar Chauhan, Managing Director, BSE said the commodity market is at a nascent stage and there is lot of scope for growth, which can be achieved by diversifying into new commodities to provide effective risk hedging instruments
.