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Thursday, 28 November 2019

Guar Seed supply will remain tight due to lower production

As per export data released by the “Agricultural and Processed Food Products Export Development Authority”(APEDA) for the period of April-2019 to August-2019, guar gum export has declined by 18.28% or 40,648 MT, from 2,22,454 MT in year 2018 to 181806 in current year 2019 for the same period. Declining export of guar gum year by year is concern for guar growing farmers and whole guar gum industry. Guar gum is a unique agriculture product which can be used for different purpose due to its physical and chemical property. 

Major portion of guar gum is exported for oil and natural gas industry. Currently oil and natural gas industry is stagnate. Oil prices are stable due to over production by OPEC countries, which is sufficient for the global demand. Crude oil is being traded around USD 64.27 /Barrel. High dependency on oil and natural gas industry is not is favour for Indian guar gum industry. There is requirement of regular research and development to increase the consumption of Guar gum in food industry and other industries. 

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Guar Seed supply will remain tight due to lower production
Oil rig count is decreasing in USA. As per Baker Hudges oil rig count currently 803 oil rig are active in USA which is lower by 276 then previous year oil rig count during same period. Declining oil rig count and drilling activities is not a positive news fro the indian guar gum industry. Global demand of crude oil will boost the oil prices and that will lead to increase in new oil drilling activities in USA. Gulf countries are covering their trade deficit by increasing the crude oil production. Increasing crude oil production by gulf countries is keeping pressure on crude oil prices. 

Due to poor performance of guar commodity in previous years, farmers are making distance from Guar cultivation. This year Guar crop was cultivated on 30,87,789 Hectare area. As per advance estimate by Rajasthan Govt guar production is expected to remain around 10,31,427 MT in Rajasthan for Kharif-2019. 2,00,000 MT guar seed production is expected from other guar growing states. This year rainfall was not distributed properly in whole guar growing belt. Farmers preferred Bajra crop over Guar crop due to better performance of Bajra crop. 

There are no any major chances of price rise in near future due to declining demand of guar gum powder, but prices may boost due to tight supply as production of guar seed is limited. Cultivation area is also shrinking. Farmers can hold 70% production for next 3-4 months. 

In this week NCDEX guar seed price is INR 4135/Quintal for 20th December contract. BSE Guar seed price for 20th December contract is INR 4093 /Quintal. NCDEX spot price is INR 4075/Quintal. NCDEX guar gum price is INR 7510/Quintal for 20th December contract. NCDEX spot price is INR 7565/Quintal. In local physical markets (Mandi) guar seed prices is INR 4300/Quintal and guar gum prices is INR 7600/Quintal.

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