Monday, 8 January 2018

Is 2018 a boom year for Guar seed and guar gum or Guar Gum Industry ?

There was big boom in Guar in year 2012 and prices went up to ten times of normal price of that year. At that time condition of market was in favor of  Guar.  In 2012 production estimates were low, new oil drilling were started by fracking method, crude oil prices were at peak.  Same conditions are this times production of guar is low in comparison to last years. USA administration has planned for new drilling for self sufficient energy production, crude oil prices are moving upward and export demand of Guar gum is also increasing.  

As per production is concerned market man are giving an estimate of 70,00,000 - 75,00,000 lac bags of guar seed. This year sowing area was low and guar cultivation under irrigation conditions  were also low due to low prices of last 3-4 years. As per old stock is concerned, at thsi time only new material is coming in market. After discussion with traders it was found only 15-20 % arrival is in old stock. It was also notices that recovery of guar gum also lower in old guar in comparison to new Guar because of low moisture.



Crude oil prices are continuously improving last week it was at high level after 2015, It is expected that prices will rise further as OPEC has cut down its production there is political instability in middle east region and Iran. Export of crude was dropped down in monetary terms during last 4-5 years from Gulf countries. Most of revenue in gulf countries comes from export of crude oil. Govt are struggling to increase the revenue in these countries, recently UAE and Saudi has imposed VAT  on goods to increase revenue.

As per data released by Govt export of guar gum has increased up 45 % in comparison to last year . There is also increase in  revenue in per unit terms. Exiting export data are very positive and as per market information there significant export demand. 





Till now prices of guar has grown up to 40 %. Guar is being traded at Rs 4200 /100 Kg in Jodhpur markets. There is demand in market prices are expected to cross Rs 4500/100 Kg level in this month. As per market men in current scenario Rs 5000 is achievable level. But farmers and traders should not wait for 2012 level. 

As per pakistani traders and farmers prices are also increasing Pakistan. This year production of Guar seed was also low in Pakistan but existing stock is still with traders and farmers in Pakistan. if prices of Guar gum rises in international market then prices of Guar will also go up in Pakistan.



Other than demand from oil and natural gas industry there is good from Food & Pharma industry. After Rice and Buffalo meat, Guar is major farm export commodity from India.  Except domestic factors prices of Guar is also affected with international economic movement like crud oil prices, USD exchange ratio, Geopolitical incidents and international politics. After 4500 level farmer should keep releasing their stock slowly and slowly in parts instead of complete holding or  one lot selling.

Guar gum export 2017-2018 from ( from April-17 to November - 17 )
Prices are also positive in commodity market. Forward contracts of  Jan, Feb, March and April NCDEX are being traded at Rs/100 Kg 4254, 4327,4381, 4457 with open interest of  48000, 42460, 10080, 1110 .

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