Wednesday, 6 May 2015

Why Guar seed and Guar Gum is going up ? Is it real or speculative ?


Guar and guar gum both are becoming highly speculative in nature. Every week there is different picture , In one week it is goes up in next week it slide down. Either it reflects as top looser or it reflects as top gainer in commodity exchange. IS it real or speculative. Commodity should follow same trend at list for one month  specially in international market, because it take minimum two month in contract negotiation and delivery.

It is questionable that why this trend  of speculation is keep going in forward market. NCDEX is only market where Guar Seed is traded, so it is very easy for speculators to manipulate the market trend.


Following factors gives a clear indication of price fall for guar seed and Guar gum. up to last month it was moving down side but from last month it is moving upside with regular speculation.


Why Guar seed and Guar Gum is going up ? Is it real or speculative ?

Bumper Production

As per existing data available and released by different state govt there was production of more than 3.4 Million MT Guar Seed production. It is 1.4 million more than the one year demand. Last year demand of guar seed was 1.8 Million MT that is be some where equal to 2 Million MT.

Carry Forward Stock of Last years

As per last year demand and supply data there was  carry forward stock of 0.8 Million MT. Before last year, production of guar seed was also bumper. if we add this carry forward stock to last year production then Huge stock of guar is available in market. This is the reason that Guar seed prices are continuously falling since new harvest arrival started in market.

Demand of Guar 

The demand from Oil and Natuarl Gas Industry is low this year. Figure of guar gum demand  should be lower than last year. As per analysis demand of Guar seed for this year should be around 1.5- 1.7 Million MT, so this year , there is  1.7 Million MT Over production as per demand.


guar seed and guar gum seed.

Low crude Prices 

Most of Guar gum  is used in Oil and Natural Gas industry for hydraulic fracturing process as Guar Gum Powder. Due to over supply of oil in market prices of crude is its lower level. For a stable guar seed and Guar Gum prices, prices of crude oil should be more than 80 USD/ Barrel. But it is far below than this figure. Guar is a demand driven product. In this over production condition there is no chances of supply driven movement.

Warehousing in USA

Many Indian companies has stocked there production in US for ready to sell and cash and carry concept. This activity is back biting the industry.  Industry has loose the long term contracts buyer gives order as per their current demand. There is hyper competition and low margin. Fragmented demand cant be stable factor for the price rise. 

Processing Unit in India

Some foreign partner has developed the processing facility in India so it is not easy to identify the new demand so early that it can give immediate effect to market prices.

IF we analyse the above factors and try to correlate the demand and supply then rate of guar seed should be in the price brackets of INR 3000-4000 / 100 Kg. But it is being traded more than 5000 with regular speculation. Investors are advised keep away from this game of speculation.

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