Guar Seed Market Analysis

A couple of institutional features of the castor seed market have to be analysed in order to bring forth an explanation of the results so obtained. An important factor is the cropping season of castor seed from November to March. Of the total number of contracts traded each year, the March contract is the beginning contract or the new contract (also termed as harvest contract) since it coincides with the harvest season. This contract is available for trading from November to March which is the harvest season and this factor makes the March contract different from other contracts. It is a major contract that provides supply side information about the new crop which becomes available in the market on a daily basis. Hence, it is only for the March

Guar crop cultivation takes place mainly during kharif season. Total production of guar bean in India is estimated to have crossed 2.7 million metric tons during the agricultural year 2013-14. Guar was traditionally grown on marginal lands mainly for food, animal feed and fodder and now is used as a crop with various industrial usages ranging from shale gas fracking, food, printing, pharmacy, textile, etc. What is unique is the binding, thickening and emulsifying property of guar gum powder obtained from guar seed which has made it a much sought after product in the international market. The United State of America is the largest importer of guar from India. The crop was initially a minor crop with limited business interest and within the period of two years it became India’s largest agricultural export to the United

Yet, most of the well known research work carried out has been in relation to hedge funds and currency markets. A lot of available evidence on the effects of speculation activity is mixed, in some cases questioning the destabilizing aspect. Several periods of financial distress have been a common ground for examining the role of speculators and hedge funds in particular. In chronological order some of these are the 1992 European Exchange Rate Mechanism (ERM) crisis, and the 1994 Mexican peso crisis (Fung and Hsieh, 20002); the 1997 Asian financial crisis (Brown, Goetzman and Park, 2000); and perhaps most famously the financial bailout of Long Term Capital Management (Edwards, 1999). In some episodes, hedge funds were deemed to have significant exposures and more than likely exerted market impact, whereas in other episodes they were found to be unlikely to have contributed to destabilization. Brunnermeier and Nagel (2004) in their study of hedge funds and the technology bubble concluded that those funds did not exert a correcting force on stock prices during the bubble and hence they question the efficient markets notion that rational speculators stabilize