Wednesday, 27 July 2016

Guar seed recovered around 20.31% & Gaur Gum recovered around 30.33% from 1stJuly to 23nd July.

Guar seed recovered around 20.31% & Gaur Gum recovered around 30.33% from 1stJuly to 23nd July.

Positive movement was noticed in complete guar complex. At the starting of July-16 guar seed was at the level of 3200/100 Kg. today it is being traded at 3850/100 Kg. It has recovered almost 20.31% or Rs 650/100 KG. Guar gum was at Rs 5600/100 Kg. Today it is being traded at Rs 7300/100Kg. There is recovery of 30.33% or Rs 1700/100Kg. This is very good return by this guar complex within 22 Days in this year. 

Estimate of Sowing of Guar is very low.

Till 18th July, there is estimate of 9,00,000 Hectare guar gum cultivation from Rajasthan, 40,000 Hectare guar gum cultivation from Gujarat and 25,000 Hectare guar gum cultivation from Haryana.  Total Guar sowing area is lesser than 10,00,000 hectare. At maximum side, guar cultivation area will not cross 12,00,000 Hectare during this year.  In best possible condition production will not cross 60,00,000 Bags of Gaur seed. Or 6,00,000 MT. It far below the average of last year’s productions.

Farmer will not go for fresh guar cultivation until guar will not cross 5000 level. It will not cross 5000 level in current crude oil rates especially in this remaining July month. . 

Farmers are interested but even current rates are not attracting to go for Guar seed cultivation. Farmers need a stable rate for guar seed cultivation. This is also good for industry if the guar seed production goes down. In this case over supply condition will not come and there will be balance between demand and supply.

Export is flat as last year.

Export data were released by Govt for different commodities. There is good news for guar gum export in provisional data. During April and May -2016 there was export of 59,609 Mt of Guar seed. In the same time in April and May-2015 there was export of 61,796 MT of Guar gum. Last year crude oil rates were also better than this year. It is clear that there is regular demand of commodity even at lower crude oil prices. Last year Guar gum was exported at USD 1901/ MT approximately 2 USD/Kg but this year it is exported at 1107 USD/MT or Approximately 1 USD/Kg. Last year there was export of 117 Million USD or 743 Crore INR. This year during April and May there is export of 66.01 Million USD or 440 Crore INR. It was noticed that export is increasing during June and July.  Actual picture will come after release of data by the Govt. As per initial inputs it is increasing.

Restricted Supply during this year

Importer will also go for bulk buying before rates shore up. After knowing the fact that supply will shrink the importers will insure the smooth supply either they will go for stocking or they will give bulk order for annual supply. There will be holding at every level famer will hold for better price, processor will stock for Annual processing requirement. Stockist will stock in expectation of better return. Exporter will also hold as per requirement of Importer.  In the shrinking of low cultivation area every stack holder will try to ensure the regular supply and better price. The best effect of this low cultivation area will come in next year because next year there will be no stock left as carry over. 

Movement before Fresh production

Major stocking activity of existing stock will take place before fresh production. Demand from local trader will give an upward movement. Once the stockist and speculators will active then price s will move upward very fast. There can be still chances of Return of 20-30% in next two months. Existing supply will also become tight. Already this is a restricted supply period. Only rich farmers or the farmers who have ability to hold the commodity is holding commodity.  Rest of farmers have already sold the commodity after harvesting and as per their financial requirement. Initial effect of this low sowing will start to come during these two months or before fresh production.

Forward Market movement

For next two month market will on the market sentiments as there are no fresh contract up to 15th October. For October contract guar complete is already strong. Guar gum has crossed 7300 level and guar seed has crossed 3900 level. It is very strong position. Meanwhile if the demand increases and supply shrinks at the time of harvesting the guar will be around 5000 level. Size of contract is also growing regularly. It is becoming less risky.

Current situation  

Stockists from small-small town are active and right now Guar is only commodity which can be stocked for return or investment purpose. Consolidation of small-small stock has been start. If is good to invest in one year old commodity then fresh commodity, because in fresh commodity there is moisture loss. Market men think that this is good time for investment in guar.  Some investor will wait for confirm news of sowing data after 15th August. Stockist have active in market.

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