Guar prices will remain stagnant due to poor demand from stagnant oil and natural gas industry

This is peak arrival period and guar gum prices are stagnant in market. Due to crop failure and prediction of lower guar seed production farmers, traders and exporters were expecting the boom in guar seed and guar gum prices. but in market things are not working as per predictions.  

Crude Oil Prices:

As per global predictions, crude oil prices will fall further. OPEC countries have agreed to cut production due to lower demand for crude oil. Demand for crude oil will remain slow as the global economy focuses more on clean energy generation. Policymakers are introducing new environmental emission standards for less polluting industries. Currently, Brent crude oil is being traded around USD 82 per barrel, and WTI crude oil is being traded around USD 75.96 per barrel. Oil prices have come under further pressure after a cut of 684,000 barrels per day by OPEC plus countries. There is also news that Brazil might join the elite group of OPEC plus countries. The oil and natural gas industry is a major buyer of Indian guar gum.

 Guar prices will remain stagnant due to poor demand from stagnant oil and natural gas industry 

Oil Rig Count:

According to the oil rig count data released by Baker Hughes, the number of active rigs is increasing internationally. In comparison to last year, there are 962 active rigs globally, which is 51 more than the previous year. In the United States, there are 622 active rigs, which is 162 rigs fewer than the previous year's count. There is a decline in the total active rig count in the USA, Canada, and internationally. Guar gum is the major drilling chemical used in oil production and new rig development.

Global Instability:

Wars are ongoing between Israel and Hamas, Armenia and Azerbaijan, Ukraine and Russia. There are also instabilities in the entire Middle East, including Syria, Lebanon, Egypt, Iraq, Iran, Yemen, etc. There are some reports of a ceasefire in the Hamas-Israel war for some time, but it is not expected to continue for a longer period. There are chances that the war may escalate in the entire Middle East, with a major concern being a potential USA-Iran war.

Assembly Election in Rajasthan:

Assembly elections have been completed in five states in India, and the results will be declared soon, forming a new government. The fresh policies may influence the further movement of guar prices. However, due to the upcoming Parliament election in April-May, there are fewer chances of new policy implementation by the new government, as time will be consumed in new government formation and allocation of ministries. After that, the Model Code of Conduct will come into existence for parliament elections. Assembly elections in Rajasthan are crucial for the guar market as Rajasthan is a major guar-producing state. Guar is a major agricultural commodity, so it always remains in focus for policymakers.

Harvesting and Arrival of Guar:

Harvesting of guar has been completed, and peak arrival is ongoing. Since November has passed, peak arrival will continue in December. Now, large farmers have started holding the guar seed, and they are not bringing it to the market. Stockists will also finish their stocking activity after December. No major price changes have occurred after the production, indicating that either demand is poor or production is not as low as to create a significant gap in supply and demand. There is no problem in the arrival of guar in the market.

There are no major possibilities of guar seed or guar gum supply shortage. Prices will remain stagnant. Currently, industries, exporters, importers, and stockists are waiting for the new government formation, new agriculture policies, and export policies. Before the arrival of the new crop, a new state government and a new central government will be formed. Once the new government is in place, new financial policies will be announced. If good-quality guar seed is available at reasonable prices, exporters, processors, and stockists must consider stocking it. Farmers should also release/sell their stock slowly.

In this last week of November, NCDEX guar seed prices are being traded at INR 5545, 5712, 5766 per 100 kg (quintal) for 20th December 2023, 19th January 2024, and 20th February 2024 contracts. NCDEX guar seed spot price is INR 5622 per quintal. NCDEX guar gum prices are being traded at INR 11390, 11530 per 100 kg (quintal) for 20th December 2023 and 19th January 2024 contracts. NCDEX guar gum spot price is INR 11428 per quintal. In local physical markets (Mandi), guar seed prices are INR 5500 per quintal, and guar gum prices are INR 11400 per quintal.

Guar Cultivation Area Data Released by the State Government. Demand for Guar Gum Will Also Increase.

The guar cultivation area has decreased. According to data released by different State Governments, the estimated guar seed sowing area is 29,02,732 hectares. This data has been released by the State Governments of Gujarat and Rajasthan. No significant cultivation area has been noticed in Haryana, and the Haryana government has not mentioned guar crop in their advance estimates. 

Guar Cultivation area has fallen 

According to the Rajasthan Government, guar sowing has been done on 27,99,489 hectares, which is 103% of the target sowing area of 27,00,000 hectares. During the previous year, sowing was completed on 30,79,450 hectares, which is 2,80,450 hectares less than the previous year. According to data released by the Gujarat Government, guar has been cultivated on 1,03,243 hectares in Gujarat. During the same period in the previous year, there was guar cultivation on 1,04,081 hectares.

Crop Damage Due to Rainfall at Maturity:

Despite a good guar cultivation sowing area, the rainfall was not sufficient for the maturity of guar crops. Crop damage has been noticed on a large area due to poor rainfall or no rainfall at the maturity stage. Even the quality of guar arriving in the market is not good due to rains after crop harvest.

Guar Cultivation area has fallen

Worsening Geopolitics and an Increase in Disputes:

Geopolitics is at its worst level, with all the continents directly engaged in wars and conflicts. Some of them include Ukraine-Russia, Azerbaijan-Armenia, Israel-Hamas (Palestine), and many other countries like Iran, Turkey, Qatar, Lebanon, and Syria making provocative statements. Due to this worsening geopolitics, the demand for fuel is increasing, and fuel prices are also rising. If a regional war were to erupt, such as Israel-Palestine (Hamas), there are chances that crude oil prices may soar up to USD 160 per barrel.

Increase in Oil Drilling/Fracking Activities

If the prices of crude oil rise, global fracking activities will increase. There will be an increased demand for drilling chemicals, and the export demand for guar gum will rise globally. Besides the USA, European, Chinese, and Russian companies will also explore new drilling fields. Crude oil is crucial for the global economy, and a regional war in the Middle East could lead to interruptions in crude oil supply globally. Indian guar gum powder is primarily consumed by the oil and natural gas industry. Crude oil production activities are on the rise globally, with currently 940 active oil rigs, 61 more than the previous year at the same time.

Guar seed cultivation area Rajasthan from India 2023-2024 data

Drought in Canadian Prairies and Lower Hay Yield

In addition to the demand for crude oil production, the demand for guar protein (Churi Korma) will increase in the cattle/animal feed industry. Due to drought in Canadian prairies, cattle farmers are seeking feed alternatives. Drought and high temperatures have reduced the yield, with this year's hay yield being 40% less than the 10-year average. The meat production sector is trying to adapt to the current situation by switching to alternative feeds like canola by-products, hay, meal, silage, straw, or other available alternatives. Guar meal and guar korma are also good sources of high protein.

Guar seed and Guar gum Market data 

In this week, NCDEX guar seed prices are being traded at INR 5696, 5783, and 5832per 100 kg (quintal) for the contracts expiring on 20th November 2023, 20th December 2023, and 19th January 2024. NCDEX guar seed spot price is INR 5664 per quintal. NCDEX guar gum prices are being traded at INR 11417 and 117576 per 100 kg (quintal) for the contracts expiring on 20th November 2023 and 20th December 2023. NCDEX guar gum spot price is INR 11494 per quintal. In local physical markets (Mandi), guar seed prices are INR 5600 per quintal, and guar gum prices are INR 11500 per quintal.

Guar Seed & Guar Gum traded strong due to adverse climatic conditions to guar farming

INDIA (www.guargumcultivation.com) - Guar Seed and Guar gum traded strong in Jodhpur market after adverse climatic conditions to guar cultivation and poor predictions of arrival of rainfall. Strong buying is noticed in physicals markets at higher prices. Climatic conditions are very poor in guar growing belt. No major rainfall has arrived in this region since last 3-4 weeks. The crop is showing the moisture stress conditions. If there will be no rainfall in next on- two week then then crop will almost damage on large guar cultivation area 

In Jodhpur market Guar Seed is traded at Rs 6,200/100 kg higher on last closing and Guar gum is traded at Rs 13,250/100 kg higher on last closing.

Guar Seed & Guar Gum traded strong due to adverse climatic conditions to guar farming

Good quality of Guar Seed is traded at Rs 6,300/100Kg and average quality Guar Seed is traded at Rs 6,150/100 Kg. Standard quality Guar gum is traded at Rs 13250/100 kg. In interior location Guar is traded up to 5,800/100 Kg.  

Guar gum and guar seed are traded strong in forward market. At NCDEX (National Commodity & Derivatives Exchange Ltd) Guar gum is traded at Rs 12708, 12955 higher by 0.66% or Rs 122/100Kg, 0.89% of Rs 115/100 Kg with open interest of 30730, 27400 for September and October contracts. Guar Seed is being traded at Rs 6159, 6292 higher by 0.67% or INR 41/100 Kg, 0.73% or INR 46/100Kg, with open interest of 55370, 41405 for September and October contracts.

There are also predictions of gain in crude oil prices. Crude oil prices are being traded at upper side during last trading session after the U.S. Energy Information Administration predicted the decline in inventory of more than 10.5 Million Barrels for the last week of August, 2023. Crude oil is being traded at USD 85.5/Barrel.

Today's Guar Seed and Guar Gum Price: What's Driving the Movement in the Physical and Commodities Markets?

Guar seed and guar gum prices are on the move today, with the physical market and commodities market both seeing significant changes. Here's what's driving the movement and what it means for investors.

Guar seed and guar gum are two important commodities that are used in a variety of industrial applications. Guar seed is the source of guar gum, which is a thickener, stabilizer, and suspending agent. Guar gum is used in a wide range of products, including food, beverages, cosmetics, and pharmaceuticals.

Guar seed and guar gum prices have been on the move in recent months, with the physical market and commodities market both seeing significant changes. In the physical market, guar seed prices have risen by over 20% since the beginning of the year. Guar gum prices have also risen, but to a lesser extent.

What's Driving the Movement in the Physical and Commodities Markets?

There are a number of factors that are driving the movement in the physical and commodities markets for guar seed and guar gum. These include:

Increased demand from China and India: China and India are the two largest consumers of guar seed and guar gum in the world. Increased demand from these countries is driving up prices in the physical market.

Reduced supply: The supply of guar seed and guar gum has been reduced in recent months due to a number of factors, including drought in India and Pakistan. This has also contributed to the rise in prices.

Speculative trading: Speculative trading is also playing a role in the rise in guar seed and guar gum prices. Speculators are buying guar seed and guar gum in the hope that prices will continue to rise.

Today's Guar Seed and Guar Gum Price: What's Driving the Movement in the Physical and Commodities Markets?

What Does It Mean for Investors?

The rise in guar seed and guar gum prices is good news for investors who are invested in the guar gum industry. However, it is important to note that prices could also fall if demand or supply conditions change.

Investors who are considering investing in guar seed and guar gum should carefully consider the risks and rewards before making a decision. They should also do their research to understand the factors that are driving the market.

Here are some additional factors that could affect guar seed and guar gum prices in the future:

Weather conditions: Weather conditions in India and Pakistan, where most of the world's guar seed and guar gum is grown, can have a significant impact on prices. Droughts or floods can reduce yields and lead to higher prices.

Government policies: Government policies in India and Pakistan can also affect guar seed and guar gum prices. For example, if the government imposes export restrictions, it could lead to higher prices.

New uses for guar seed and guar gum: The development of new uses for guar seed and guar gum could also lead to higher prices. For example, guar gum is being used as a substitute for some plastics, which could increase demand and drive up prices.

Guar seed and guar gum prices are likely to remain volatile in the near future. However, the long-term outlook for the market is positive, as demand for these commodities is expected to grow. Investors who are considering investing in guar seed and guar gum should carefully consider the risks and rewards before making a decision.

As on last trading day, 14th July,2023, NCDEX guar seed price was INR 5596/Quintal, INR 5688/Quintal, INR 5799/Quintal, for 20th July 2023, 18th August and 20th September 2023 Contract. NCDEX spot price was INR 5631/Quintal. NCDEX guar gum price was INR 11,240/Quintal, INR 11,423/Quintal, INR 11,661/Quintal, for 20th July 2023, 18th August 2023 and 20th September 2023 Contract. NCDEX spot price is INR 11309/Quintal. In local physical markets (Mandi) average guar seed prices are INR 5,500/Quintal and average guar gum prices are INR 11,000/Quintal.