Guar seed and guar gum is moving upward with returning Monsoon

Monsoon has about to return with in one-two days. There is no rainfall in rain fed belt of Guar cultivation. There is more loss in late sowing crop. Late sowing crop is facing the heavy scarcity of water. Right now there are no chances of rainfall crop will damage on large scale. Farmers who opted gaur cultivation in last stage are facing the drought condition.

There can be some profit booking in short term but in long term guar will recover very fast. Arrival of gaur will depend on prices of Guar. It will be very hard for traders to source guar at current level. Stocking of guar will start with initial arrival and prices will go up. After the stocking prices will move with tight supply. Supply of Guar will be very tight up to next production in October - 2017.The opening of Gaur will again up in next week. Forward contract will give additional support to Guar.

Guar prices were down due to prediction of large cultivation; Production related predictions has been stopped now. Prices will move up with loss related predictions and conditions. Situation will clear by the end of September.

Guar seed and Guar gum recovered from lower level.

In the starting of week Guar seed and Guar gum declined to very low level. Guar gum reached to 6000 level and Gaur seed reached to 3300 level with lower circuits due to increased cultivation area and good rainfall. But it recovered from its declined level and sustained to last level of 3500/100Kg for Gaur seed and 6500/100Kg for Gaur gum powder. Market is getting some stability.  

Monsoon will be returning back

Rainfall has slow down. There is no news of fresh rainfall. As per weather prediction Monsoon soon will returning after 5th of September. There is no news of damaged on crop due to heavy rainfall in a large area.  Early sowing crop will not require another rainfall and it got rains on all the major critical stage of Sowing, crop development, flowering.  It is at pod formation stage and there is sufficient moisture for maturity and crop will start mature by last week of September and it will dry is October. At the last of October, it will ready for Harvest. For late sowing crop this is very critical stage. It will require another lot of rainfall for the crop development and flowering, if there will be no rainfall in next 15 Days then there will be crop damage in late sowing crop. The loss can be up to 40-50% on large area. 

Disease and Insect Attach

News of insect and pest attack has started to spot. There is news from Bikaner and Hnumanagrh area that leaf spot disease has started to emerge with growing temperature and moisture. If the prices of Guar will remain low, then investment on plant protection be low and crop production will be loss. Most of guar crop is repeated crop on same plot on guar cultivation area so there are more chances of disease outbreak. This year there is more humidity so there are more chances of disease attack.

Speculators are moving out from contract.

Last week and in this week there were continuous three lower circuits and most of people who were doing speculative trading has faced heavy loss. Some people made the selling positions at lower level they are also in fear.  Genuine investors are still stuck with their positions.  This week most of agriculture commodities were under selling pressure and there was huge loss to speculative trading. It will very hard for them to re-enter in this trade.

Sowing of Guar

As per data released by the different Govt. Sowing of Gaur has reached to 32,00,000 Hectare.  Right now no final figure has released. It expected that it may further improve. Rajasthan Govt released last data on was 22nd September,2016.  The final estimated data will be compiled after release of final figure by all state Govt of Rajasthan, Haryana and Gujarat. 

Demand is stable 

Export demand of Gaur gum powder is stable. Right now it is around 30000 MT/Month or 1000MT per day.  That is equal to processing of 3450 MT guar seed per day (with 29% gum recovery). In this way there is annual requirement of 12,50,000 MT of Guar seed. Which is 2,50,000 MT higher than current production of 10,00,000 MT of guar seed.

Crude is Volatile 

Crude oil is highly volatile at this time but is moving in between 40-50 USD/MT. It is expected that crude will improve by the end of this year. If crude improved more than 60 USD than it will give a support to Guar prices and guar may touch the level of 5000 or more.

Current movement

Prices will stabilize in next week. It will more toward 4000 level. With some news of crop damage prices will keep improving.  At lowest level 3000 level is stable. In normal business prices will keep moving around 3500 level. With some positive news prices will reach around 4000/100Kg in this Month.  We may see some fall in Churi Korma prices. Falling Churi Korma prices will lead to improvement in the Guar Gum prices.

Guar moved upward direction due to low cultivation, even crude is not improving

Guar gum preformed very well in this weak. it recovered from 3250 to 3450/100 Kg and gaur gum recovered from 5750 and reached up to 6200/100 Kg. In last two days of weak it lost the upper positions with declining crude oil prices in international market. Monsoon has almost started in all the Rajasthan Sowing has started in most of Guar cultivation area. In remaining 20-25 % area sowing will complete in next week. As per primary inputs Guar is not a priority crop for farmers in this year. In irrigated are farmers are going for Maize, Cotton, Rice, Lentil, Moong, Groudnut, Bajara, in rainfed area farmers are going for Moong, Moth, Bajara, Til.

Guar gum seed cultivation area will shrink.

Guar is cultivated from Haryana to Rajasthan and Gujarat. It has also increased in other states like MP. Maharashtra, Andhra, Telangana, Punjab, This year due to low rates guar will shrink mainly in Rajasthan  and Gujarat. Small area can be come from Haryana.

Traditionally guar gum was cultivated in rain fed area under low cost of cultivation condition. After the rainfall farmers used to take their camel in farm and start sowing of his in house stored seeds , there was requirement of minor weeding operation which was required to feed the grass to cattle/ animal.

Right now situation has changed Guar cultivation has become expensive. It start from sowing by the tractor, using the good quality seeds, using agrochemicals for plant protection , applications of fertilizers, at every step cost is involved today. Some market men say that farmer will go for guar but if it is loss making cultivation then he will never go for Guar cultivation.

Comparatively other crops are protected by MSP and giving good return to farmers even at market rates like Moong moth Bajara. Why farmers will go for guar cultivation  in a loss making crop after paying money for cultivation.

This year cultivation area is likely to limit only 10,00,000 hectare just 1/5 of last year cultivation when market rate of guar was 5000/100 Kg  and other crops rates were lower than Guar. This year Guar is trading on 3100-3200 comparatively other commodities are being sold at higher prices.

This year Guar doesn't seem to give good return to farmers in comparison to other crops and farmers are not taking interest in guar cultivation as their primary crop. Some farmer use it as crop rotation, green manure, farm development they can work go for Guar cultivation which will come under 10,00,000 hactare area. 

Farmer consumption will increase.

At low price domestic consumption of guar specially used by cattle owner as feed concentrate. All the cattle feed prices are very high and they have better option of Guar to use it as feed concentrate. It is traditionally used in western Rajasthan and consumed in bulk quantity.  There consumption of 100-200 Kg in one milking period per cattle up to 4500/100 Kg farmer will not have hesitation to use guar as cattle feed. If the prices remain below

Demand of Guar seed from cattle feed will increase.

At low price guar is used to produce to Guar korma which is supporting guar prices at lower level. Consumption of guar korma is increasing worldwide. Generally there is 56-58% protein in Guar Korma while there is only 41% protein in Soya protein. soya protein is costlier than Guar Korma. Guar Korma is being exported at Rs 38/Kg and Soya protein is being exported at Rs 49/Kg.  Guar is having 15 % more protein and Rs 10 cheaper than Soya protein.

Quality of production ( Guar seed ) will be poor.

As per prediction this year there will be more rainfall and high humidity. In high humidity condition guar started to degrade and it turn brown or black. Even some time the Gum started to decompose. Standing crop also affect drastically. Infection of disease like bacterial blight and root rote increases in high humidity condition. Some time crop doesn't mature on time if there is more humidity in soil. Even seed doesn't dry after sowing, which are not suitable for filling in bags.

Crude oil will improve

Crude prices  is the major factor which will lead guar rates to upper level. In normal condition guar can go up to 5000/100 kg if crude will support then it may reach up to 6000-7000/100 Kg. right now crude is at its lowest level and it is improving slowly and slowly. In long term crude will up to 40-50% at from this level or it will reach up to 60-70 USD/ barrel. Any positive sign from crude oil industry will make a positive impact on Guar seed prices.

Supply of Guar seed will be tight

This year there will be gap between demand and supply. In the case of price rise this Gap will be more wide. farmers and traders will hold the commodity. Already situation looks more tight and it will make it more severe. Speculators and stockist will become active and prices will move very fast.

Up to settlement of July contract there will be some pressure of supply . For long term position this level is good for making position in market. Guar will give good return in 12 months.