Guar seed and guar gum price are in upward trend with strong fundamental.

This week was very strong and highly volatile for guar price and guar gum price. Guar and guar gum prices touched highest point of its last three-year trading. Complete gain in prices were washed during last two days of week due to speculations  and falling NCDEX guar guar gum price. Fundamentally guar was strong this year from supply side due to poor supply predictions. This year rainfall fall pattern was very poor. Most of guar seed production comes from rainfed agriculture, this year guar cultivation area under irrigated conditions was very low. Over all this year production of guar was estimated lower than previous years. As per market men, estimated production of guar seed for the year 2017-2018 was around 70,00,000-75,00,000 bags of 100 Kg each. Arrival was regular and there was no any major information on increase in demand of guar gum.  During the arrival of new crop in month of October, November and December, prices were stable and these were not moving upward due to peak arrival. 

But at starting of January, some data started to circulate in market, released by APEDA and other govt agency, that guar gum export has increased by 42 % during current budget year in comparison to previous year for same period of April- November. This year there was export of 3,21,570 MT of Guar gum during the last year in same period export was 2,26,431 MT.  Market got some support from these figures.

During this arrival period, crude oil prices were moving upward, somewhere this was a sign of increase in demand of guar gum in future.  Crude oil prices are another strong fundamental behind increasing guar gum prices.  A after production estimates crude oil prices works as major catalyst for guar and guar gum prices. During arrival period crude oil prices were moving upward slowly but it was not moving far away from level of US 50/barrel.  With tight geopolitics and cut down of crude oil production by OPEC countries, prices started to move upward. Guar gum prices were not getting enough support from these slow growing guar prices. 

When crude oil price started to move toward the level of USD 70/barrel in international market it started to draw attention of US administration. At the end of last week, a hot news emerged from USA that USA will open its all off shore drilling facilities. It was hot news for guar gum industry as oil and natural gas industry will require drilling chemical with new drilling facilities. Guar gum is an important drilling chemical. Stocks of oil drilling companies have improved in USA. During last one month US oil and natural gas industry is attracting investment. 

With news of opening of new offshore drilling facility Guar prices and guar prices started to move upward Guar seed touched the level of Rs 4400/100 Kg in local markets. Guar gum touched to the level of Rs 9600/100Kg. At the same time speculators became active in market under selling pressure prices of guar gum fell around Rs 500/100Kg one time it touched the level of Rs 9200/100Kg but by Friday evening it got recovery in physical market. Gar seed prices strong and stable in this pressure and it did not fell in physical market as arrival of commodity dropped in market. Guar gum prices remained down ward continuously for two days. 

There was one more factor which was giving fundamental support to guar prices; that was extreme cold wave in north glob. There is huge requirement of natural gas and heating oil to keep these country warm and working.

With strong fundamentals farmer and traders are confident for guar. Holding of guar has started in market. It is expected that in coming days arrival of guar gum will also drop in local market.  Prices of guar would get boost from poor supply. At lower side Guar Churi korma is very strong, it is being traded at Rs 2700/ 100 Kg there is regular export demand of roasted Churi korma. All fundamental are positive and not reversible at this time as new arrival of guar will come in October-2018. Up to next arrival of monsoon prices of guar will keep improving slowly and slowly don’t expect a one or two day straight peak. Generally these type of price rises are highly speculative and unstable. Framer should sell out stock slowly and slowly as per their requirement.

There is only fact which put pressure on guar, that is as future decision of OPEC to increase to crude oil production to keep the investment away from USA oil and natural gas industry.  

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