Guar Seed & Guar Gum strengthening with end of guar sowing period and upward movement in crude prices.

Guar Seed & Guar Gum strengthening with end of sowing period and improving crude prices.

Guar Seed and Guar gum remained highly volatile. Guar business was shut down with two lower circuits and touched to 3500 (guar seed) and 6200 (guar gum) level. There was heavy rainfall in guar growing belt and some parts faced flood like situation.  Rajasthan Govt has declared the fresh data of guar sowing. As per these data guar has been sown on more than 23,50,000 hectares uo to 11th August. If the improvement in sowing area will keep going, then total sowing area will touch up to 30,00,000 hectares in India by the end of Next week. Sowing will be finished by the end of next week. As per field report sowing area is not increase as per the growth rate of Govt Data. Currently Govt data is only source of authentic and reliable with coverage on large area.

Crude oil market is also getting some support from the news of OPEC planning for freeze the production.  Crude oil has also improved in this week. It has recovered from USD 40/barrel and reached to 46 USD /barrel and this is very good supportive fundamental. As per oil and gas expert crude will stable on 65 USD/barrel with in this quarter and it will keep stable at this price up to next one-two yeas. Growing crude oil will give support to the shale oil production and companies.  Oil service companies will focus on fresh shale oil production.

Production of Gaur seed will remain tight Earlier estimate was 50,00,00 Bags as per fresh estimate it will reach up to 80,00,000 to 90,00,000 Bags. For the first 10,00,000-hectare productivity will be remain around 500 Kg/ hectare and in the next 10,00,000 to 20,00,000 hectare will be around 100-200 Kg/Hectare. This production will remain under 90,00,000 hectares. There are no any chances of improvement in production but it may go down with insect and disease attack. 

Guar growing belt will face a lot of problem in investment in pulses specially in Kharif season. There will be bumper production of Moong and Moth. Moong has already start going down toward 3000 and Moth has reached 3700/100Kg. As per market men both the crop will remain around 3000 level during next 12 months.

In this situation Guar will remain only crop which will attract local investment and stocking activity. Once the prices of gaur seed will move out from 4000 level then stocking  wilkl start and supply of guar seed will remain very tight.

Instead of external factor Guar industry is down due to internal weakness. Investors are highly volatile; Industries are more focused in future market then sport market. Instead of individual profit and loss industries are hedging their demand and sharing their profit with other processing industries and less focused on individual technical expertise and cost control. 

In long term Guar will attract a lot of global investment in processing and quality improvement. Indian guar industry still faces the problem of lack of technical expert and R&D team. Industry need to focus on industrial atomisation and quality control. Fresh investment in India is also expected in guar gum processing industry at large level.

Global player like Solvay has planning for full-fledged operation in India, Solvey has already acquired the business of Rhodia. Solvay has mainly focused on non-oil and gas Guar gum production and that is good news toward diversification of Guar gum industry based mainly on Oil and natural Gas Industry. Solvay finds Guar interesting for their future R&D projects. 

Stick with existing positions. Below 3500 level is good entry point for guar seed Gaur gum investors can enter below 6500 level. Or they can wait for next week. As after release of final sowing data of guar; one downward movement will come in Guar. Even there is holidays in next week and most of business activities will be remain sluggish and gaur may also come down. If there is any opportunity to enter at lower level, then it will be very good. 

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