Fundamentally Guar seed and guar gum are very strong

Prices of guar seed and guar gum were down on Friday due to profit booking at the upper level in the future market. March contract of Guar gum and guar seed were closed at 9282/100Kg and 4298/100Kg. All the stack holders are uneasy with this sudden movement in prices. Guar seed is the major cash crop in guar gum growing belt. This is leading commodity of the future market. This is also the major commodity for driving the commodity business. Guar is a demand-driven commodity. The production also plays role in the price movement of guar seed and guar gum. The major demand of guar gum arrives from Shale oil and gas production industry. 

Currently, crude oil production from shale process is increasing regularly. US shale oil and gas production industry is enjoying the increasing crude oil prices. OPEC has decided to cut the oil production to control the falling prices. These price control measures initiated by OPEC and Russia are working. Last week Crude oil production in the USA hit the highest level of 10,271,000 Barrel Per Day. Crude oil prices have also improved in the USA. Brent crude oil is being traded around 67 USD/barrel. Shale crude oil production remains profitable above USD 60/barrel. Drilling activities are increasing in USA at current crude oil prices level. Oil rig count has also increased in this week. Stocks of oil drilling companies are gaining and giving the good return to investors. The current level of crude oil price is investor friendly, this is profitable for everyone.

Guar seed production at large scale 

As per the demand of guar gum is concerned, it will increase with stable crude oil prices. Consumption of drilling chemicals is increasing with stable crude oil prices. AS per existing data this year guar gum export is 40% higher than last year until December. Export data for January has yet to be released by govt. As per market information, January export was also higher than the previous year. Fundamentally Guar is not week currently. Speculations are the different game. This year Gaur seed production was lower than the previous year. As per market information, there was the production of 70,00,000-80,00,000 bags of guar seed. Export of Guar gum is higher than the previous year. There gap between demand and supply. 

The new production of guar seed will come after 8 months. This year in Kharfi -2018 Sowing of guar will be low as Govt will decide higher MSP of Kharif pulses. Farmers will go for the sowing of Kharif pulses instead of guar as Pulses will be supported by the higher MSP. The flow of lower guar seed production will remain to continue even into next year. Supply of guar seed will be also poor even next year. Supply of guar seed will be limited. India is the only major producer of guar in the world and Rajasthan is the Major producer of Guar in India. Next year is the general election year. Govt will assist farmers in the form of MSP. Guar is grown in a limited geography, so guar seed is not a priority for Govt. 

As per fundamental conditions, Guar prices will bounce back from the current level. It will cross the level of Rs 5000/100Kg due to poor supply. Ready Guar seed is not available in the market. Peak arrival period of guar seed has ended. Monsoon prediction in My June will give another major prediction about guar prices. If the monsoon is predicted poor, then guar seed prices will get another boost. The current level of Guar seed and guar gum prices is not matching with demand and supply. Supply is restricted and Demand is increasing.

Crude has recovered 10 % in comparison to last week. Impact of Crude will come in guar seed and guar gum prices. Guar churi Korma are performing very well and giving good support to Guar gum processing industry. It will keep supporting until Soybean prices remain high in the international market. At this time all the fundamental for guar seed and guar gum are positive.