Guar Seed and Guar Gum Prices may strengthen with Improving Global Economic Activities

Guar Seed and Guar Gum Prices may strengthen with Improving Global Economic Activities

Strengthening Crude Oil Prices

Crude oil prices are improving in the global market with increasing economic activities. Currently, crude oil is being traded at an eight-week high. The global economy is showing strong signs of improvement. Brent crude oil is being traded at USD 82.43 per barrel, and WTI Crude oil Prices are being traded at USD 77.363 per barrel. Both indicators of crude oil are showing strong signs. Improved crude oil prices will support guar gum prices from their current level. The demand for guar gum is expected to improve. Physical demand for Guar gum will strengthen guar seed and guar gum prices in the local market.

USD and INR Exchange Rate

As the exchange rate of USD is improving, it will carry more cash flow into the market. The demand for guar gum is expected to rise from this level due to increased cash flow. Importers will engage in maximum contracts with the increased cash flow. A weakened rupee will strengthen the current level.

 

Guar Seed and Guar Gum Prices may strengthen with Improving Global Economic Activities

Guar Production Estimates

As per the data released by the State Government of Rajasthan, the estimated guar seed farming was done on 28,92,840 hectares, and the estimated guar seed production will be 17,48,781 metric tons of guar seed production. Prices are expected to improve with increasing economic activities. Prices will not fall further from this level. There are fewer chances of a downfall in guar seed and guar gum prices.

The current level may yield good returns with a lower risk factor. Physical demand will also increase. In the last 12 months, 8-10 new Guar Gum factories have been established in Rajasthan under different government schemes. Even two plants have been established for modified Guar Gum Powder manufacturing. Modified guar gum is used for premium quality toiletry and cosmetic products.

In the week of January from 22nd January 2023 to 28th January 2023, NCDEX guar seed prices were being traded at INR 5431, 5490 per 100 kg (quintal) with open interest of 65,375 and 25,600 for 20 Feb 2024 and 20th March 2024 contracts. NCDEX guar seed spot price is INR 5454 per quintal. NCDEX guar gum prices are being traded at INR 10546.10695 per 100 kg (quintal) for 20 Feb 2024 and 20th March 2024 contracts with open interest of 43,715 and 14,275. NCDEX guar gum spot price is INR 10719 per quintal. In local physical market yards (Mandi), guar seed prices are quoted at INR 5200 per quintal, and guar gum prices are quoted at INR 10500 per quintal.

Guar seed and Guar gum prices have stuck in whirlpool of crude oil

Dependency on oil and natural gas industry is taking the guar seed and guar gum prices in uncertainty. Though crude oil is a commodity and it is fuel for global economy, but it has emerged as geopolitics weapon. Global power are trying to prove them selves as superior to control the crude oil prices. With one decision and meeting prices of crude oil start to move ward and next day with another decision prices of crude oil starts to fall. Up and down in prices is regular trend in any business. When demand goes down or production increases then prices tends to go down. Indian Guar seed and guar gum industry is taking the downward crude prices as negative factor. In reality prices of crude oil is going down as production of crude oil is increasing in USA. Today USA is producing more than 11.7 Million barrels per day. USA economy has become net exporter of crude oil.

All this development has happened because of shale crude oil production, which uses fracking technology. Guar gum is major drilling chemical/ingredient in fracking technology. If we look at the data of guar gum export. Then we find that guar gum export is increasing. South American countries have emerged as new destination for Indian Guar gum. Indian Guar gum industry and traders should not respond immediately after guar gum price change. 

As per global rig counts data there are 144 more active rigs count then previous year in this week (08/12/18) USA. Arrival of Guar seed in market has dipped due to election, winter and marriage season. This time is last time of peak arrival after December arrival of guar gum will be fall below 10000 -15000 bags per day. Small farmers have already sold their stock after the harvesting as they don’t have holding capacity. Physical demand of gaur is still very high. 

Guar seed and Guar gum commodities are being quoted strong in local physical markets to strong buying at lower levels. Prices of Guar seed and Guar gum both are quoted strong. Future trading of Guar seed was closed strong at closing of last trading but future trading of guar gum Guar gum was weak at closing of last trading

Demand of Guar gum for oil drilling in USA is increasing

Crude Oil production in USA is increasing regularly and in the month of November Crude oil production in USA is historic all-time high. In the month of November domestic crude oil Production is 11.7 Million Barrels per Day. USA is emerged as largest oil producer of world after Russia and Saudi Arabia. Export of Crude oil from USA is less than 3% percent of global export. It si expected that USA will increase the share of its crude oil export. Its is good sign for Indian guar gum industry that crude oil production in USA is increasing and USA uses fracking technology for crude oil production. Guar gum is used in bulk quantity in hydraulic fracturing for oil drilling.

Active rig count in USA in also higher than previous year. On 21 November there was 1079 rigs in USA which were 156 more than previous year. Oil rig count isn major scale for drilling industry and its input supplier. Active rig count is an active demand indicator for product used in new drilling, completing, producing and processing of hydrocarbon. 

Export demand of Guar gum is high currently. Continuously it is increasing than previous years. Demand of Guar Churi Korma is also high in market. Export of Guar Churi Korma is also on peak. Arrival of guar in market is going down. Most of guar has been settled either with processors or stockist. Availability of guar will be very limited in coming days. USD/INR exchange rate is also coming down. Exporters have to pay more for the local procurement and processing in calculation of USD. 

Guar seed and Guar gum commodities are being traded strong on physical markets due to strong buying at lower levels. Prices of Guar seed and Guar gum both are quoted strong . Forward contracts of Guar seed and Guar gum are also strong due to buying at lower levels. Good quality of guar seed is traded at Rs 4400/100Kg and average quality guar seed is traded at Rs 4300/100 Kg. Standard quality guar gum is traded at Rs 9000/100 kg. In interior location, guar seed is traded up to 4200/100 Kg. Guar seed is being traded strong in the future market. At NCDEX (National Commodity & Derivatives Exchange Ltd) guar seed-10MT is closed at Rs 4311, 4362, 4410 higher by 1.5 percent or INR 63.5/100 Kg, 1.52 percent or INR 65.5/100, 0.96 percent or INR 42/100 with open interest of 79930, 74910, 2060 for December, January and February month contracts. 

Guar gum is being traded strong in the future market. At NCDEX (National Commodity & Derivatives Exchange Ltd) Guar gum- 5MT closed at Rs 8717, 8826, 8965 higher by 2.36 percent or Rs 201/100Kg, 2.07 percent or Rs 179/100, 1.05 percent or Rs 93/100 with an open interest of 23325, 53645, 660 for December, January and February month contracts.

Export of Guar gum from India has increased

As per the data released by the APEDA (Agricultural and Processed Food Products Export Development Authority) export of Guar gum is higher than previous year. This year export of guar gum from April,18 to Sep,18 is 2,65,195 MT. Last year for the same period, guar gum export was 2,52,868 MT. This year there is 12327 MT more guar gum export. In monetary term value of exported guar gum is INR 24,30,00,00,000 or 355 Million USD. Export value of exported guar gum is 19% higher than previous year in Indian Rupees and 12 % higher than previous year in USD.

Export of Guar gum is increasing continuously than previous years. Global crude oil production is increasing. USA has emerged as top crude oil producing country in world. Guar gum powder is used in oil well drilling for crude oil production. As per market men this year production of guar seed is lesser than previous years. Arrival of guar seed is going down in the market. By the end of December arrival of guar seed will be almost finished. Traders are buying the guar seed in market as per market price. There is no over supply of guar seed in market. Demand of Guar korma is high in market that’s why guar gum prices are lower. Prices of Guar seed and guar gum were under pressure of profit booking at upper level. November month contract for guar seed and guar gum in NCDEX was settled around 20 November. Now guar seed and Guar gum are traded for December month contract in commodity market. 

Guar seed and Guar gum commodities are being quoted weak in local markets due to trimming the positions at upper levels in forward market markets. Prices of Guar seed and Guar gum both are quoted weak. Future trading of Guar seed and Guar gum are also weak due to weak guar gum prices. Good quality of guar seed is traded at Rs 4400/100Kg and average quality guar seed is traded at Rs 4300/100 Kg. Standard quality guar gum is traded at Rs 9000/100 kg. In interior location, guar seed is traded up to 4200/100 Kg. Guar seed is being traded upward in the future market. At NCDEX (National Commodity & Derivatives Exchange Ltd) guar seed-10MT closed at Rs 4472, 4531 higher by 1.02 percent or INR 45/100 Kg, 0.87 percent or INR 39/100 with open interest of 122420, 38200 for December and January month contracts.

Guar gum is being traded in upward side in the future market. At NCDEX (National Commodity & Derivatives Exchange Ltd) Guar gum- 5MT closed at Rs 9156, 9300 higher by 1.51 percent or Rs 136/100Kg, 1.32 percent or Rs 121/100 with an open interest of 61045, 1135 for December and January month contracts.

Guar and guar gum weakened with falling crude oil price

Last week was very good for guar seed and guar gum prices but in this week prices of guar seed and guar gum has fallen with falling crude oil prices. That is just a sentimental factor. USA and OPEC have increased the crude oil production before the sanction on IRAN. Increase in production of crude oil will continue so that countries can cut the oil import from IRAN and supply of crude oil can be normal after sanction on IRAN. Oil production in USA is based on fracking technology and guar gum is used in fracking technology. 15 OPEC countries produced more than 33.3 million barrel per day of crude oil in October month which is highest after month December-2016. Crude oil prices are fundamental factors for guar seed and guar gum industry, but it should not be considered same in all situations. Currently crude oil prices are decreasing due to increased oil production. Demand of crude oil is still very high. 

Guar in not a single used commodity. Guar is multi use commodity. Future demand of guar gum may arise from any industry. Oil and Natural Gas industry will keep using Guar gum in crude oil production. There is trade dispute between USA and India. Recently USA has removed 50 Indian products from duty free GSP list most of them are agricultural products. Demand of Food grade guar gum is regular. Prices of Guar Churi/ Guar Korma is good and it is maintaining the higher levels. 

This year production guar seed is estimated lower than previous years. Marketman are estimating the production of guar seed around 60 - 70 Lakh (6-7 Million) bags (100 Kg each). That is insufficient for current year demand of guar seed. Demand of guar seed will remain weak in this week due to Diwali season. Guar gum processing factory staff will be on Diwali holidays. Arrival of guar will be also poor as farmers are busy in festival. Guar seed and guar gum Business activities will increase after Diwali week (after 11th November). Supply is still poor in market. Speculators are active in market. Keep hold on physical stock and positions of guar and guar gum . Guar seed and guar gum prices will bounce back with increased business transaction. Volume of November transaction is coming down but volume of December month contract is increasing in commodity market that is good sign. 

Guar seed and Guar gum commodities are being quoted weak in local markets due to falling prices in commodities markets. Prices of Guar seed and Guar gum both are quoted weak. Future trading of Guar seed and Guar gum are also weak due to falling crude oil prices. Good quality of guar seed is traded at Rs 4600/100Kg and average quality guar seed is traded at Rs 4500/100 Kg. Standard quality guar gum is traded at Rs 10300/100 kg. In interior location, guar seed is traded up to 4300/100 Kg. Guar seed is being traded downward in the future market. At NCDEX (National Commodity & Derivatives Exchange Ltd) guar seed-10MT closed at Rs 4548, 4635, 4693 lower by 0.07 percent or INR 3/100 Kg, 0.02 percent or INR 1/100, 0.07 percent or INR 3.5/100 Kg with open interest of 66020, 104260, 6430 for November, December and January month contracts. 

Guar gum is also being traded weak in the future market. At NCDEX (National Commodity & Derivatives Exchange Ltd) Guar gum- 5MT is being closed at Rs 9920,10080, 10200 lower by 0.14 percent or Rs 14/100Kg, 0.12 percent or Rs 12/100, 0.42 percent or Rs 43/100 with an open interest of 17980, 58580, 1135 for November,December and January month contracts.