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. 



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