Will guar seed drop
down lower than INR 2982 or move higher than INR 4200 ?
After
the strong forward position in Future market Guar prices hit high and crossed 3300/100Kg. Guar seed is
regularly under pressure after the harvesting of fresh crop. At the starting of
harvesting guar seed prices were trading at 4200/100 Kg on 12th
October 2015, after that guar seed started to fall regularly due to excess production
and low consumption. Falling crude prices hit if double strike.
Within
two months on 14/12/2015 guar reached down to 3100/100 Kg. from that level it
started to gain and on 04/01/2016 guar reached INR 3425/100 Kg. From that level
it again started to go down and on 02/03/2016 it reached to lowest level of
last four year at INR 2982/100 Kg. It recovered form that level and it reached
to INR 3557/100Kg on 25th April 2016 and it again started to fell
down and dropped to INR 3100/100Kg on 21/06/2016.
Guar seed is moving between INR 2982/100Kg to INR 4200/100Kg. Now Guar seed has two
directions lower than 2982 and upper than 4200. There
are three major factors which will decide the rate of Guar those are
Production of Guar , Holding of Guar and Consumption of Guar.
Production of
Guar
Guar
is major Kharif crop in Guar growing belt, which is grown in long geographical
area from Haryana to Gujarat in a single belt.
This year production area is expected to drop down to 10, 00,000
hectare, which was 55, 81,216 Hectare in Year 2015-2016. 47, 86,781 Hectare
area was in Rajasthan and rest of around 8, 00,000 hectare area was from other
states like Punjab, Haryana and Gujarat.
This year other states Guar cultivation area will be below 1,00,000
Hectare and from Rajasthan it will be around 9,00,000 Hectare. Total Guar cultivation area will remain
around 10,00,000 Hectare, which is 20 % of last year production. Around 80%
sowing has done in this pattern. In any
situation guar production will not cross 15,00,000 Hectare.
As
per above figure total Guar seed production will be 5, 00,000 MT (50 Lac Bags).
Last year guar seed production was 27,51,423 MT (2.75 Crore Bags), as per
traders it was only 2 Crore Bags. Around 3,60,000 MT Guar gum has been exported
last year, means around 10,80,000 MT
Guar seed has been processed only for export purpose. IF we add 30% for
domestic purpose then total 15,00,000 MT Guar seed has been processed or 1.5Crore
Bags has been processed. 16,000 MT guar seed has been used for sowing. Generally
there is 18 %-20% moisture at the time of harvesting it reached up to 10-12% in
one year. 6% average moisture loss of total weight that will be around 1,65,085
MT moisture loss. There is another 5 % loss of sand, plant parts, low quality
and domestic use by farmer, that is 1,37,571 MT guar seed. total carry forward for this
production year it is 12,32,768 MT or
1.23 Crore Bags It is in very loose condition as per Govt data of production.
If there is 2 Crore bags guar seed production instead of 2.75 Crore then carry forward
will be only 50 Lac Bags.
As
per market men/ traders this figure is not more than 7,50,000 MT guar seed in
market including last carry forward. At maximum side only 7,50,000 MT (75 Lac bags)
of Guar seed is lying with farmers/ traders/ stockist/ factories.
Total
Availability of Guar seed for this financial year and up to next production
arrival ( Total one year and Six month up October 2018) will be 1,73,27,670
Bags or 17,32,676 MT ( 1,23,27,670 Bags: current Carry forward 50,00,00 Bags : Current year expected
production).
2015-2016
Availability of guar seed from last
production Year 2015-2016
|
Consumption of guar in last Financial
Year 2015-2016
|
||
Particular
|
MT
|
Particular
|
MT
|
3,00,000
|
15,00,000
|
||
|
(
2015-16 year)
|
27,51,423
|
Guar Seed for Sowing ( this year)
(10,00,000
hectare)
|
16,000
|
Moisture
loss 6% on current production
|
1,65,085
|
||
Farmer
use, low quality, plant parts and other 5% on production
|
1,37,571
|
||
Holding
of commodity
/
Carry forward
|
12,32,767
|
||
30,51,423
|
30,51,423
|
||
Over supply from last production cycle for this Year- 12,32,767
MT (more than 1.23 Crore Bags)
|
|||
2016-2017 (If demand and Crude rate
remains same)
Availability of guar seed from this production Year 2016-2017
|
Consumption of guar in this Financial
Year 2016-2017 and next 6 month up production 2017- October
|
||
Particular
|
MT
|
Particular
|
MT
|
Carry over of guar seed 2015-2016
|
12,32,767
|
(
one year + 6 month)
|
21,50,000
|
|
(
2016-17 year)
|
5,00,000
|
Guar Seed for swoing ( next year)
(20,00,000
hectare)
|
32,000
|
Moisture
loss + Farmer use + low quality 5% on total
|
86,638
|
||
Holding
of commodity
|
|||
17,32,767
|
22,68,638
|
||
Deficiency
/supply shortage of guar seed up to next production cycle- 5,35,871 MT (Around 53.5 Lac Bags)
|
|||
Above
calculations are as per current demand of Guar gum and Current crude rates. If
demand increases and rates goes up then holding of commodity will increase in
market. In normal supply condition there
is scarcity of 10,00,000 Bags If rates goes up
then holding will increase and
There will be scarcity of 1,00,00,000 Bags for Guar gum processingindustry.
(Finical
Year- April to March; Guar production & guar consumption Cycle - October to
September)
Holding of
Guar
Due
to high prices of pulses and extra monitoring by govt and expectation of good
return in Guar market will hold more Guar than this year. Especially in western part of Rajasthan Guar
is a cash crop and farmers keep it hold
for their financial needs. In the news of low production traders and stockist
and speculator will also hold a good quantity of commodity from market. For next financial year there will holding of
same amount of commodity as this year.
With increasing prices situation of supply can be tighter and farmers will
hold more commodity. There will holding of Guar seed from 50, 00,000 to 1, 00,000
MT. For next year at current demand and
crude price there will be no carry forward for next to next year- 2017-18. In
2016-17 all the seeds will be used and scarcity of 5,35,871 MT of Guar seeds.
If we assume that market will hold 10,00,000 MT seeds then there is scarcity or
short supply of 1.5 Crore bags for Guar gum processing industries for this financial
year and up to next production in October -2017 .
In
normal condition consumption can be assumed as current year guar gum seed production 15,00,000
MT April -2016 to March 2017 and 7,50,000 Mt up to next guar production up to
October 2017. Total guar seed consumption will be around 21,50,000 MT up to next production. If demand from Churi Korma industry remain
same then it may reach up to 25,00,000 MT and If demand from oil and Natural
Gas industry also increases then there will consumption of 30,00,000 MT for 18
Months. Crude will not remain below 50
USD/ barrel for next 15 months. Guar Churi & Guar Korma industry will also give good boost
for the consumption of Guar seed .
Production,
Demand and Consumption are at lower side in current situation. Production can’t
be increase up to Next 15 Months till October 2017. Meanwhile demand and
consumption will increase then Guar will again reach in Year 2012 movement and
rates of guar will sky rock. Guar seed will reach up to 5000/100Kg in current
sluggish condition and it may cross 10,000 in good condition. Side by side speculators, stockist and future
contract will also affect Guar prices. Processing capacity of guar gum processing industry will also increase. Some closed plant will also start to work.
Positions can be made for next 12- 15 Months Guar will give good return it can
be somewhere 100 to 200 %. From 20th
July 2016 onward Guar will never move toward INR 2982/100 Kg even in worst
conditions.
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