70% of guar gum is used in O&NG industry. Price of major component of O&NG, Crude oil and Natural gas are going down. And expert are predicting further downfall in both products. It is expected that Crude may cross the lower level of 35$-40$ barrel. It is not impossible the prices had reached below level of 40 $ / Barrel in August, 2008.
Current political and economical condition does not give any sign of improvement in crude prices. There will be continuous pressure on middle-east and Russian economy due to low crude oil.
Natural gas will also not work very well as most of contract for current winter has been already done. The current down fall may not attract any new investment for future activities.
Low rate of crude and natural gas will attract the low cost inputs. Alternative / substitute of guar will create a competition in input chemical market.
Production of Guar: There is estimated production 20 million Bags of guar seed in India in current year.
Demand of guar: The existing contract will keep going. There is less possibilities of new contracts.
Business activities in Guar: - Business activities in guar will be lower during next week due to yearend holidays and New Year celebrations. The export activities will be low during this period.
Supply of Guar: - This is mid of year. It will take time to come new winter crop, which generally comes in April. Sumer crop produce will be only source of fund for farmers. Guar supply will increase. Small trader and investor will come out from the guar stock and investment that will add in supply.
Trading movement: - Downfall may continue. Current level is below Rs 120 that may reach below Rs INR 100-95. Within one month or up to Feb starting Guar gum will reach down to INR 90. There may be also additional pressure of guar gum from existing stock. The manufacturer and importer will have pressure to sell the existing stock due to time. Might be big stockist can wait for long term price movement but small and medium stockist will react negatively and sell their stock to avoider addition loss.
Political Movement: - Sliding down crud may lead to cheaper farm fuel, fertilizers, farm input and cheaper transportation. So there might be no major pressure on Guar from farmer side. Low inflation will not create any political aggressiveness among guar farmers.
Next coming Three Tier Panchayat (rural) election will require addition money for contestant in guar growing region. Guar is major stock able commodity among big farmers. Low rate of guar may lead to more guar inflow in market.
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