Saturday, 18 June 2016

Guar gum recovered more than 10 % in Last week with low cultivation predictions.

Guar gum recovered more than 10 % from Rs 5100/100 Kg to 5700/100 Kg in last  week.  This was biggest recovery in a week after last production. Guar gum got good support from low cultivation predictions. Farmer will give more preference to pulses after heavy recovery in Chana prices.

After the fall in crude prices Guar gum was hit worst that Guar seed. Guar seed remained stable due to Guar Korma and Guar Churi prices. Crude oil is also stabilizing above 50 USD/ barrel. In last 5 month Crude has been costlier up to 70 %. In primary prediction World Bank estimated that this year average crude prices would 37 USD/ barrel. But Now World bank has revised it from 37 to USD 41/barrel. By the end of August crude will traded above 60USD/Barrel.

With the growing crude major recovery will come in guar gum prices. With Growing Guar Gum prices Guar seed will also grow. But it wil grow slowly and slowly. Up the harvesting of crop guar seed will touch 4500/100 Kg and Guar Gum will touch 8000/100 Kg.

During  this period Guar seed has also recovered more than 5 %  from 3050 to 3200. It is showing stability at this level. In Jodhpur market Guar seed is traded at RS 3200/ 1000 Kg. Guar churi and Guar Korma is giving very good support to Guar seed prices.

This year the quality of the guar seed will be also very poor. In high humidity conditions we can see more than 70 % failure of Guar crop specially due to Bacterial blight.  It is very severe disease and within 4-5 Days it cover complete farm in favorable conditions.

Another main disease in root rot. Generally this disease accrue in those field where Guar crop is taken on repetition on same farm.  Guar is grown in wide area in guar growing belt regularly since last three four years. Now there are many chances of  attack of root rot.

With low production data, and low cultivation area stockist and speculators will also active. IF small- small quantity is stocked with small traders/ stockist  then a major stock will not reach up to market.
All the commodity prices are increasing due to inflation and production cost then prices of guar will also show 10-20% growth. If the production of Guar does not remain good in this year or farmer will not get respective prices then next year three will be further drop in Guar cultivation area.

State Govt and central govt are pushing the Pulses cultivation.  As per state govt  estimate Guar will be sown on 36,00,000 Hectare area from total sown area of 1,53,00,000 Hectare and there is further prediction that Moth will replace 21,00,000 hectare area from the Guar area. Then Guar crop may shrink on 15,00,000 Hectare area.  In this condition guar production will drop very low. Irrigated area farmer will not prefer Guar in current market condition as the opportunity cost of their land is more than the rain fed area.  

Major change in Guar seed and guar prices will come in Last July and First August. In this period Guar seed sowing data will release. IF Guar touches  4500/ 100 Kg then Guar Gum prices will automatically reach to 8000 as cost of input. IF we add other cost then INR 9000 is feasible rate for Guar gum.  Might be June contract can settle bit low as investor will be under pressure of settlement but major changes will be noticed on October and November contracts. If spot demand rise further we June and July contract can also jump.

If Govt puts stock limit on pulses then stockist may start work on Guar or other crop.  Specially in Guar growing belt Guar is major cash crop and it will attract stockist. Current growth in Guar prices are due to spot demand and no profit booking has noticed in last week.

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