Wednesday, 21 June 2017

Future of Guar seed & guar gum in new production cycle

Monsoon has delayed in Guar growing belt. Minor rainfall is noticed in few areas. As per meteorological department monsoon arrival will be delayed by one weak. It will not affect the sowing of guar in guar growing belt. As major production will come from rainfed area. Sowing of Guar keep going up to last of July in rainfed area. Early sowing guar crop is standing good . 

During last production cycle, Guar prices remained stable with periodic up and down. New production cycle has been started. Farmers and traders both are worried about future of Guar commodity. Sowing area of guar is expected to go down with poor performance of Guar commodity. Farmers will move toward kharif pulses as govt has increased the MSP and pulses has performed better than Guar during last production cycle. Farmers are getting more security in kharif pulses. 


Traders and processors have also stuck in Guar. Many plants have shut down. Guar Churi Korma is giving economic viability to functional plants. No short supply was noticed during last production cycle. There was sufficient arrival of Guar for the processor as per requirement. Supply of Guar is also expected to remain normal in new production cycle. Crop from rainfed area will be sufficient for processor demand. Crude prices are also under pressure due to global crude oil production. It is expected that crude prices will remain around the level of last year. Most of guar gum powder is used in crude oil industry. 

Prices of Guar will remain in same level during next year. It will keep moving around 3000 to 3500 level. For a small period it touched 4000 level but again it slipped toward 3500 level. Guar gum will keep moving around 7000-7500 level. Domestic demand of Guar is not too much. Most of Guar is consumed in cattle feed industry as Guar Churi Korma.  There is sufficient stock of Guar with stockist. Stock of guar will come in new production cycle as storage cost if increasing. There is saturation of Guar with stockist. Monsson is expected to remain normal. If the climatic and cultivation conditions will be in favor of Guar crop then Guar prices may slip below 3000, due to sufficient supply.. 


Monday, 22 May 2017

Pre-monsoon rainfall and future of Guar seed / guar gum

This year guar remained a low-profile commodity. Trading of new crop was started at 3300 and it could not cross 4000 level. Currently it is being traded at Rs 3750. It remained a loss-making business for stockist and traders; as cost of storage, interest on capital and moisture loss were in addition on buying cost. Crude prices in international market was major factor which kept pressure on guar prices in addition existing stock and low demand of guar gum in comparison to last year were another factor which kept prices of Guar moving around 3500.



After all pressure guar didn’t below 3000.Prices of Churi Korma were also profit making venture. International demand is mainly derived from USA, China, Germany and Russia.  It is expected that this year guar cultivation area is going to shrink. IN irrigated area Cotton is major replacement and Pulses will be major replacement in rainfed area. 

Current pre-monsoon rainfall is covering entire Guar growing belt of Rajasthan from Hanumanagarh, Bikaner to Jodhpur and Jalore. Prices will come keep moving toward 3000 with this pattern of rainfall. Early sowing is considered is Good in rainfed area and in Irrigated cotton cultivation will increase as farmers will able to do sowing of cotton in more area with same water. Initial fundamentals are not positive for Guar seed and Guar gum.


Prices will keep moving with subsequent rainfall pattern. Any uneven rainfall weather it is low or high will give boost to Guar prices. Both conditions are agronomically bad for guar cultivation. Rainfall is not only fundamental to decide Guar prices. International political coincidences will also put indirect impact on Guar. Crude output and Crude prices will major fundamental factor which will put impact on Guar prices. Guar prices will adjust steps with international demand or export of guar gum figure. 



Cultivation area of Guar will be major factor which will decide movement of guar for next 12 months. Guar cultivation area and guar prices will run on different tracks. Increasing Cultivation area will lead to decrease in Guar prices. Current contract of Guar in commodity market will carry on up to July and new contract will start in October. Let see whether Guar will shine like Gold or it will remain a Gallow of farmers and traders.  

Thursday, 9 March 2017

What is making guar seed / guar gum to jump up high.

During this trading month guar has climbed more than 25-30 %. It has given return of 25%-30 % within one month. Prices of guar seed is about to touch Rs 4000/100 Kg in physical market and prices of guar gum is about to touch 8500/100Kg. Almost guar has gained 30 % from level of Rs 3000/100Kg and guar gum has gained 41% from the level of Rs 6000/100Kg.

This year production of guar was very low in comparison to last years. It is estimated that there was production of 80,00,000 Bags during last cropping season.  This production was not sufficient for the annual demand. Carry over stock is helping to meet demand of guar for this year. If prices remain below INR 4000/100Kg then cultivation of guar seed will be down in next cropping season.


While discussing with market men it was found that arrival of guar is very low in market and it is expected to remain low specially in two months. Farmers will busy in their farm operation in this month and traders will start to trade in Rabi commodities. There will be problem in smooth supply in markets. Manufacturers are facing shortage of guar seed for processing.

Crude oil prices were also stable over USD50/ barrel during last months and it was a good support for guar in long term to be in bullish trend. There is also news that shale oil production is high in USA.  Trump administration is also positive about the increase in shale oil production.

Export data are positive during last two month. On an average, there is export of 35000 MT guar gum export in one month during last three months. Which was dropped up to 20000Mt/Month during December 2016. There is some news that stock of guar in Housten / Texas is also low.  Export to Other countries is also increasing. Another major demand is coming from Russia. Export data of food grade guar is positive. There is regular demand of food grade guar from European countries. Guar plants are running.



Technically Guar is not shining, it is recovering from down fall. It will remain in recovery trend up to 4500/ 100Kg. After that we can consider some positive movement. Guar gum need more recovery as per current prices guar gum must be around 10,000/100KKg but it is still below 9000/100Kg.

Last year guar seed was arrived at 4500/100Kg and this year it started from 3500/100Kg. If we calculate the cost of commodity + Interest on Capital + Loss of moisture + Storage expenses of Guar seed then guar must be around 4500/100Kg. Last year carry over stock is costing 4500/100Kg as raw commodity and other expenses are double. If current prices will be demand driven, then prices of gaur must be higher than 4500/100Kg (an average of fresh crop and carry over stock) and guar gum must be around 10000/100kg.

Weather data of Monsoon prediction are negative and rainfall is expected to remain late and lower than average and there rumor of poor production in next cultivation season.  But technically If there will be delay in Monsoon then guar production area will increase as cultivation are of other commodities will shrink in western Rajasthan.



Crude prices in international market will decide long term positions of Guar. Geopolitical situation is stable in comparison to last year but it is not improving. It expected to remain plunged and it will be not investment friendly. Market men are looking speculative movement in guar. It is best time to manipulate the demand & prices as supply is tight and export is positive. March Delivery in NCDEX will decide the further price movement. Please avoid the short-term positions.

Thursday, 2 February 2017

Guar is fading its shine ?

Guar remained a low-profile commodity till 2012. It is an industrial crop. There is wide range of application of guar gum powder. Guar is a highest number of industrial application in all agriculture commodities. It is used in food, food processing, textile, paper, printing, mining, oil natural gas industry, cement, pet feed, fish fee, cattle feed, cosmetics, detergent, toiletry, medicinal, pharmaceutical, and much more. After the boom in 2012 it drew global attention and very soon it became a most highlighted agriculture commodity. India is largest supplier of Guar in world. It is cultivated in low fertile, lower water availability and stress climatic conditions.



Farmers of desert of THAR started to see guar as a ray hope. Guar gum processing emerged as an important industry in Guar growing belt. Prices of guar is under pressure of supply since last 4 Year and now farmers are losing the hope. This year everyone is in loss farmers got good return from other pulses crop. Stockist invested the money but prices are going down and down regularly. Interest on investment is giving another wound. Storage loss is worry for farmers and stockist, Guar processing industries are shutting down. Guar is not preforming well in commodity exchange. 

This year cultivation area was low and new production of guar is also low. Farmers have already started to reject Guar crop and cultivation area has shrink 40-50% in irrigated belt. Now stockist are coming out from guar stock, due to continuous negative return. Old stock of Guar is coming in market and it is putting supply pressure. Investors are clearing their stock and entering in other commodities. Guar processing industry are now making profitable return on investment they are recovering tehri expenses from the Churi Korma sale. Viability of guar processing is coming from Churi Korma. Churi Korma is getting tough competition from Soybean de-oiled cake. Soybean prices are low and DOC is available at low prices.

Next 4-5 months are very critical for Guar if prices remain low then cultivation area will shrink. Next year production will further go down. Heavy rain and Low rain both conditions are bad for guar. If climatic conditions remain extreme, then Guar production will further down. Prices of guar are at lowest level. At this level, there are minimum chances of further drop down in guar prices due to strong support of Churi Korma. Generally, supply of guar comes down by the end of December, but this year supply of guar is not coming down due to exit of investors from Guar and old stock is coming in market.  If all the conditions remain positive, then guar may touch 4000 level at upper side. 

Guar is an important agriculture commodity, mismatch in demand and supply has lead it negative growth. Guar cultivation area will shrink further if the demand of guar will rise. Export data of guar gum for this financial will decide the further movement in guar. Demand will remain low in next two month as new contract of guar supply will be signed in next financial year.