Can current positive signs lead to recovery in guar Industry?

Guar industry is under heavy pressure of poor demand and over supply during last two years. This year crop has not given any significant return to farmers, investors, traders, and exporters. During last week some positive news are coming for guar industry.

There is significant increase in export of Guar gum in first quarter in comparison to last year in same period.  As per initial data sourced from APEDA, is showing improvement in export of guar in quantity and monitory terms. This year there is export of around 1,45,000 MT guar gum in first quarter ( April-June) , last year there was export of 75,000 MT of guar gum in the same period. In monetary terms current year export of first quarter is INR 1176 crore in same period last year export was only INR 547 Crores. If the current trend will continue throughout the year then industry will benefit from it. It is very positive sign for all the stack holders.

Recovery in crude oil prices has also seen in this week.  Currently crude is trading above USD 50/barrel. Demand of guar gum will increase with increasing crude oil prices. Crude  oil price has established as  primary benchmark for guar prices. Increasing crude oil prices will give boost to Guar gum prices. There will be increase in export. OPEC want crude oil prices above 50 USD/barrel and Shale producer (The process where guar gum is used in bulk quantity) will benefit from it. Shale producer will increase production.

There is heavy rainfall in some districts of Guar growing belt in western Rajasthan and Gujarat. There is news that Kharif crop has damaged in these districts. Guar is major Kharif crop in these area. Damage of Guar crop will lead of overall lower production of Guar. It is last time of guar sowing  and there is regular rainfall in guar growing area. Early sowing crop will benefit from it but it will be harm full for late sowing crop and new sowing of guar will go down. Late sowing Guar crop will not get sufficient time to mature. It is also noticed that rainfall is not good in rest of districts of guar growing belt. Major production of Guar comes from rainfed areas.

Currently guar is being traded around 3500. If above conditions will remain stable then prices will move out of 4000 level.  These two months are critical for guar. Due to poor arrival in current period there will be some positive correction in Guar prices. New arrival of Guar will come in market in after October. There will be pressure of new crop arrival at that time up to January-2018.