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.
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| 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.
