With falling crude Guar Seed and Guar gum lost the Gain.

Guar gum has fallen 6.1% in last week after crude settle down below USD 50/Barrel. Guar Seed fell down from 3200 to 3050/100 Kg and Guar Gum fell down from 5700 to 5350/100 Kg.

Fundamentally Guar will face low supply and high demand during  this financial year. It looks strong at lower side with good demand from Cattle feed Industry. 

Crude will recover

Currently crude is the major factor which will predict the demand of guar gum powder. Last week crude recovered above 50 USD/Barrel and we saw good recovery in guar gum prices. Sowing of Kharif crop has been started. In irrigated area Farmers are avoiding Guar crop, they are more focused on Moong crop. In Rain fed area Farmers follow the same practice but here they are focused on Moth crop.

In the same season Govt is putting all affords to control the pulses prices. Providing higher MSP, Providing subsidies, Providing high quality seeds, using intelligence agencies, Stopped the forward trade, Planning for contract farming, Agreement for supply of pulses with foreign countries.
At another side Guar is emerging as demand driven self sustained crop. This is a major industrial crop from rain fed Area which is used to produce Guar gum powder, that is used in many industries. At production side Guar seed production will remain below 1,80,00,000 bags. The quality of guar seed produce will also poor.

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At lower side guar seed  will not break the level of 3000 and Guar gum will not break the level of 5000. Currently crude is putting pressure on guar gum prices. Crude will recover in next week with some fluctuation. In next two months it will go beyond the range of 50 USD/barrel. Once crude will come out from the zone of 50 USD then guar gum will recover very fast.

Entry point for long term investment

In next week Guar will take upward movement because investors from Chana trade will come out Bajara and Guar are only two Kharif crop which are taken in Guar growing belt and traded on NCDEX/ Forward market. There are existing prediction that Bajara cultivation area will also increase and production of bajara will also remain high, so there are no any major chances in earning in bajara contracts.

Currently guar is only crop which can give excellent return to investors as it is traded low and it is good entry point with no risk of loss.

Stocking for yearly demand by big players 

In July contract there will be buying for Guar seed and Guar gum for October, November and December contracts. There will be more buying for Guar gum and Guar seed will follow the trend on Gaur gum. Investors will make long term positions with low cultivation estimates. Once the sowing activity will finish then traders will start to work on stocking for physical stock. Quality of new guar crop will be very poor. Quality of the existing crop is better.

All the big companies will like Hindustan, Lucid, Rajasthan, Shriram, PFT, Vikas, Jai Bharat will buy a good quantity of guar seed for stocking for their yearly requirement. To sustain in market these companies will have to process the guar seed into guar gum powder..

Demand from cattle feed

Guar will gain in spot demand. All the pulses are at higher level so there is more risk of loss. Guar is an attractive commodity to invest at lower level. Guar Churi Korma is already giving good support to Guar seed prices. In the next 4-5 month there will be requirement of concentrate for dairy cattle. In Rainy period and Winter period is major milking period in cattle. All cattle feed are very costlier today. Guar is cheapest alternate.

At lower side guar is very strong. Fundamentally there will be tight supply and high demand at low price. Crude price will keep improving slowly and slowly, Demand of guar seed and guar gum  from big player will remain same. Except the Oil industry demand from other industries will improve at low price of guar gum.

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