Expectation of normal guar seed crop production in 2014-2015 and Guar Seed & Guar Gum Prices in 2014-2015

Expectation of Normal crop

Recovery in Monsoon will lead to a normal guar seed crop in year 2014-2015  as  per current climatic condition. Rain fall is good in Guar growing belt. Early sown crop will be befit from it and  will recover from drought condition. New crop will start to come in market after mid of October. Delay in monsoon has increased Guar sowing in irrigated area. Irrigated area work as a insurance of good production for Guar Crop. At other side late rainfall  increased the late sowing in  rainfed area of Chrur, Hanumangarh, Ganganagar, Bikaner, Jodhpur, Nagor and Jaisalmer. 

Initial delay in monsoon weakened the guar seed crop production.but it improved significantly. Shadow of poor monsoon will effect the production of  guar seed but it will not effect the business of guar seed and guar gum. If monsoon keeps going as it is right now , then it is expected that in this year 2014-2015 , there will be production of 18,00,000 MT  (18 Millions Bags of 100 Kg. each) ) of Guar seed.  Though this production is not sufficient to cover the  expected  total demand of year 2014-2015 but  carry forward stock of last year will make it surplus amount to fall in the price of guar seed and guar gum in year remaining period of  year 2014-2015 .

Low Fracking activities in Winter Period and Guar Seed & Guar Gum Prices in 2014-2015

Low Fracking activities in Winter Period 

Winter time will start after two months. In the winter month the new fracking activities will come down. because oil and gas  company will start to work on production of Gas as the energy requirement will be increased in most of developed countries. Halt is fracking activity will not lead to any major new contract or demand of guar gum . Existing contract of guar will keep going. Mostly frackign activity is completed during the summer period. Low frackign activity will keep pressure during the remaining period of 2014-2015 up to march. In the next 6-8 months the demand of guar guar seed and guar gum will come down.

Availability of guar seed after Fresh harvest of Guar crop in 2014-15 and Guar Seed & Guar Gum Prices in 2014-2015

Availability of guar seed after Fresh harvest of Guar crop in 2014-15 

After two- three months guar seed arrival will increase in market. October - November will be harvesting period and there will be peak arrival for next three -four months. This arrival will lead to over supply and guar price will further come down.  Generally big farmers go for regular stocking of guar seed  for wait  and watch behavior, but small farmer will keep pressure of availability in market. The fresh arrival liquidity of guar seed will keep pressure in the period of October to February- 2015. Availability of fresh guar seed will saturate market. Guar seed and Guar gum prices will be under pressure for coming next 6-8 months of current financial year 2014-2015

Improvement in Manson and Guar Seed & Guar Gum Prices in 2014-2015

Last month it was seen decline in price of guar seed and guar gum.  Condition will be remain under pressure up to next six months. The use of guar gum and its derivatives will come down in next six months. 

The improvement in the mansoon is major factor to keep the prices under control up to next 6-8 months.  Fear of poor monsoon has gone away from the mood of farmer, trader and the processor. The improved Monsoon will support farmer as it will keep his farm expenses lower. The arrival of other commodities will also increase the  business of trader and processor, The profit from other commodities will keep liquidity  in the market and there will be money in the hand of farmer, So there will be no major pressure of liquidity  on single  Guar seed commodity o. In this improved monsoon condition it is expected that  prices of Guar seed will be remain under pressure. Guar seed prices can come in the bracket of 3500-4500 in year 2014 - 2015. 

Carry forward Stock of Guar seed for 2014-2015 and Guar Seed & Guar Gum Prices in 2014-2015

Carry forward stock guar stock for year 2014-2015 

The carry forward stock of guar seed is major aspect to decide guar seed and guar gum  price. Farmers and traders are still having huge stock of guar seed.  Last year price stability and decline was due to carry forward of huge guar stock of 2012.   As an rough calculation  there is 5,00,000 MT guar seed stock of 2013 and 5,00,000  MT guar seed  stock of 2012,  5,00,000 MT guar seed stock of 2011 and before that. So total tally of carry forward guar seed stock is around. 15,00,000 MT. The available stock of guar seed for year 2014-15 will be around 30,00,000 MT.  The estimated consumption of guar seed  in (Year 2014-15) can be in between 22,00,000 MT - 25,00,000 MT. More or less 5,00,000 MT - to  8,00,000 MT buffer Guar seed stock will keep pressure on guar prices in year 2014 - 2015. If  price of guar seed go below the bracket of 3500-4000, then there is chances of  increase in consumption. In that case price consumption can cross the limit of 25,00,000 MT guar gum seed in year 2014-2015. But it is only possible if price of guar seed go below INR 3500/ 100 Kg. Till this consumption there will be pressure of carry forward Guar Seed Stock.

Sanctions on Russia by western world and Guar Seed & Guar Gum Prices in 2014-2015

Sanctions on Russia by western world 

Sanctions on Russia will also keep pressure on Russia to lower the prices of Natural Gas.  Low natural gas prices will keep pressure on  International Energy prices. This effect will further transmitted to guar gum and guar seed prices. It was expected that fracking activities was suppose to increase in Russia , but the technology is laying with American Companies and sanctions will keep them away from Russia. A huge quantity was suppose to be used in Russian oil field by american companies. Now there is no chances of further progress in this issue in coming next 12-18 months. Guar seed and guar gum prices will be under pressure due to these sanctions on Russia.

Civil war is in Middle east, in Syria, Libya Lebanan, and Iraq and Guar Seed & Guar Gum Prices in 2014-2015

Civil war is in Middle east,  in Syria, Libya and Iraq :-

The civil war condition will keep in position of uncertainty to investors.So there will be no major investment in Syria, Iraq and Libya. Civil war condition will also keep pressure on these groups to sell more and more crude oil to earn money. All other source of employment has been crashed. Oil will be only exchangeable commodity for these fighting groups. Low rate of crude oil in international market will prohibit new investment in oil and natural gas sector.Means there will be no requirement of guar gum powder for new exploration. Current political crises in these countries will keep pressure on Guar seed and Guar Gum prices.

Low consumption of Ice cream cream and other summer food & beverage

Low consumption of Ice cream and other summer food and beverage :-  A lot of guar gum powder is used in ice cream and other summer food and beverages . Consumption of ice cream and other frozen food will come down during next 6-8 months, so  demand of guar gum powder will come down from domestic and international food industry during the remaining period of 2014-2015. The rate of guar gum will under pressure from the food industry. 

Advance Estimate of Guar ( guar gum ) Seed Production in India in year 2014-2015

Most of advance estimate has been released in guar growing states of Rajasthan, Haryan and Gujarat for the year 2014-2015. 2-3% guar seed production comes from rest of states. The final tally of estimated  guar seed production is as follows.

S.N.                                   State                                               Production ( MT)
1.                                   Rajasthan                                               1339806
2                                    Haryana                                                   340000
3                                    Gujarat                                                     179100
4                                    Others                                                      100000
========================================================
 Total Estimated Guar ( Guar gum ) Seed  Production               1'958'906 MT
========================================================

The share of other state of has assumed around 5 % as productivity and production are is very low in Rajasthan.  We are estimating that in this year  there will be around 19'589'060 Bags around 20 Million Bags or ( 2 Crore Bags of 100 kg each). As per my estimate I am expecting a upward correction in guar seed production data of Rajasthan. 

The estimated yield is very lower than last year but overall condition  is not problematic or pathetic. It is satisfactory production. It  can easily complete the demand of  guar gum of world by adding teh cary forward stock of last year.  .

Advance estimate of Guar gum ( guar seed) production-year 2014-2015 in Gujarat shows down fall trends in comparison to last year

Gujarat govt has release the data of Guar gum ( guar seed) crop cultivation area. As per data there is estimate that guar crop is sown on 298'500 Hectare.  This year Guar gum ( guar seed) cultivation area in Gujarat state is  36.8 % lesser than last year, but it is more than before last year (Year-2012-2013).

Advance estimate of Guar gum ( guar seed) production-year 2014-2015 in Gujarat

(Guar data are highlighted in red)



GUAR CULTIVATION AREA, PRODUCTION,  AND YIELD OF LAST SIX YEAR- GUJARAT

S.N.              Year                  Area (Hectare)             Production (MT)              Yield (Kg/Hectare)

1                  2009-10                132'700                          44'700                                 337

2                  2010-11                124'600                          73'000                                 586

3                  2011-12                128'300                          74'500                                 581

4                  2012-13 #               240'000                        --------                                  ----

5                  2013-14 #              472'600                         --------                                  ----

6                  2014-15 *              298'500                         179'100                                600

     * 2014-15 data is as per estimated crop cultivation area  data released by Gujarat state govt.
     # Production data and yield data are not mentioned as I dint get any reliable information


Last year climatic condition were in favor of guar crop cultivation so guar crop cultivation area was increased but in this year the crop cultivation area is more than state govt targets. This year state govt targeted 283'500 Hectare.

Guar seed production area, Production quantity and yield of last few years 

As per an average yield of 600 kg / Hectare we are expecting 179'100 MT guar seed production from Gujarat state.  Which is less than last year but it is more than average. The production estimate is positive. The Guar gum ( guar seed) production is not bumper in Gujarat this year but it is above the average of last years.  There are three  Major Guar growing states Rajasthan, Haryan and Gujarat.

Advance estimate of Guar gum ( guar seed) production-year 2014-2015 in Haryana shows down fall trends in comparison to last year

Advance estimate of Guar gum ( guar seed) for year 2014-2015 Production in Haryana is showing down trends. As per State govt estimate of  cultivation area for guar crop is around 3,40,000 Hectare  which is  29% lesser than last year. Last year guar crop cultivation area was 4,81,000 Hectare.

GUAR CULTIVATION AREA, PRODUCTION,  AND YIELD OF LAST FOUR YEAR- HARYANA

S.N.              Year                  Area (Hectare)             Production (MT)              Yield (Kg/Hectare)

1                  2011-12                215'000                          290'000                                  1350

2                  2012-13                388'000                          278'000                                   718

3                  2013-14                481'000                          369'000                                   767

4                  2014-15                340'000                          340'000                                 1000

                (* data of 2014-15 is on this basis of estimate Sourced from State Govt.)

Estimated production for 2014-2015 is 3,40,000 MT which is 7.8 % lesser than last year. Last year production was 3,69,000 MT. As per estimate productivity has increased this year . This year productivity is 1000 Kg/Hac which is 30 % more than last year. Last year productivity was 767 Kg / Hac.

  ( Guar data are red highlighted )

Haryana contribute 20 % of total production so this variation will not be too much in total production of guar seed of India. 

Expecting record guar seed production from Rajasthan in year 2014 - 2015 as area of Guar seed ( guar gum ) cultivation has increased

Initially low rainfall and drought condition in this Kharif ( Rainy Season ) crop  worked as a reagent in increase of Guar seed ( guar gum ) cultivation area. This is called GUARTEK EFFECT in economics.

What is GUARTEK EFFECT effect ?? 

---> In extreme and adverse condition, economic behavior of  human activity leads to natural economic practices.

Its implication in " Increase of guar culitvation Area in Rajasthan in Kharif ( Rainy Season ) Crop.

Every one was in tension due to El-nino effect ( expectation of poor rainfall ).  There were clear probability of complete drought year in guar growing belt of  Rajasthan, Haryan, Punjab and Gujarat. Initial rainfall was under 80- 90 % deficient condition in this region.  Farmer were waiting for good and regular rainfall to start sowing. This year Manson arrival and  activation was very late.  These condition leaded to increase in Guar  seed ( Guar Gum ) cultivation area. In these condition farmer adopted guar as a drought resistant crop, which was a natural crop of this area since centuries. It is a true example of GUARTEK EFFECT.

There are following two major reason behind this Increase.

Reason 1 :- Replacement of high water requirement crop cultivation area by Guar seed ( guar gum ) crop cultivation area in irrigated area.

In irrigated area farmer were not sure if they will able to get the regular supply of the irrigation water during this cropping period from Canal or tube-well, because if it would have drought year then there would not have proper recharge of ground water and  irrigation project dam. There were chances that high water requirement crop can die in between. Farmer was not suer about the economic return from high these crop. he wanted to keep his cost of cultivation under control. Guar was a best alternate for him, he adopted it. 

Reason 2 :- Replacement of other crop cultivation area by Guar seed ( guar gum )  crop cultivation area in rain fed area. 

In drought area, farmers don't have too much options, generally farmer go for Bajara, Mung, Moth and Guar seed ( guar gum ). In these crop, Guar seed ( guar gum ) is only cash crop. farmer were not sure about the good rainfall so was not sure about good production. The rate of Guar seed ( guar gum ) was stable during last two three year , which is double, triple, four time to other commodity price. Guar seed ( guar gum ) has industrial application so farmers were sure about demand of Guar seed ( guar gum ) crop, that it will increase if there were any adverse condition. other rest three crop have alternate like Bajara is used as food crop, it can be replaced by any other food crop. rest two crop are pulse, which can be replaced by any other pulses. Guar don't have any alternate , so farmer shifted toward  Guar. In the late activation of Manson farmer started sowing with Guar  in rain fed area to keep himself at safer side. Guar is also as good source of green Vegetable for human and fodder for cattle .   

Rajasthan contribute around 70% - 80 % of total guar production and Guar seed ( guar gum ) cultivation of India. The safe type of activity is also adopted in the guar growing belt of Punjab, Haryana and Gujarat. We expect increase in total Guar seed ( guar gum ) cultivation area throughout the India. small contribution can be from Maharashtra, Andhra, Telangana and M.P. Later rainfall is continue and good so we expect that guar crop will be good.

If the climatic condition will be in favor , than there are chances that, in this year total production of Guar seed ( guar gum ) can cross last year production. Last year it was a record production of 2,80,00,000 - 3,00,00,000 bags of Guar seed. This year it will cross last year production specially in Rajasthan.

There is no doubt in Normal guar seed  production. An expected bracket of normal crop is 18,00,000 MT - 24.00.000 MT Guar seed production..  

Guar seed ( guar gum ) Cultivation area has increased in Rajasthan due to initial low rainfall and drought conditions

As per data released by Govt of Rajasthan it has found that the Guar seed ( guar gum ) cultivation area has increased in comparison to sowing of of last year till date. Initial statics show that this year total area under guar cultivation till 7th August, 2014, is  2.75  Million ( 27.5 Lac)  Hectare. During last year Guar seed ( guar gum ) cultivation was only 2.32 Million ( 23.2 Lac )  Hactare.  It is sharp increase of  around 19 %  . 

It is also observed that same trend keeps going.  In  same trend it is expected that it will cross Total showing of last year which was  5 Million ( 50 Lac)  Hectare. This year guar sowing/ Guar seed ( guar gum ) cultivation  area will be at record level. 

This year we can expect a bumper production, because the late rainfall is sufficient for better crop. There can be some effect on early crops but after the rainfall crop is standing in good condition. Might be total production can be lesser than last year but this year  production will be much higher than last 5 year Average. 

Decrease in Natural Gas price in International Market and Guar Seed & Guar Gum Prices in 2014-2015

Large share of guar is used in the natural gas industry for Fracking purpose. if we analyse the rate of  Natural Gas in international market we will find that current rate are at lower level.  Price chart of  Last month, last Six month, and Last year will clear the picture. as per the current international  situation there is not chance in improvement . After the end of this month, rate of gas will not effect the price of guar gum as the new farcking activities will come on halt in winter, so there is low possibility of new investment and  and new exploration work in natural Gas.. 

Natural Gas Price Chart of Last  one Month.

 ( Source Link :  http://www.infomine.com/investment/metal-prices/natural-gas/1-month/ ) 

Natural Gas Price Chart of Last  Six Months

 ( Source Link  http://www.infomine.com/investment/metal-prices/natural-gas/6-month/  )

Natural Gas Price Chart of Last  one year

 ( Source Link :   http://www.infomine.com/investment/metal-prices/natural-gas/1-year/ ) 

There is one peak in Fabruary - March-2014 , this peak was just because of the Ukraine- Russia crises. other wise there is smooth function in annual price graph. If the price would have gone in summer period then it could have effect guar gum prices. After one month natural gas prices will effect the guar gum prices, because there is no new exploration 

Decrease in Crude oil price in International Market and Guar Seed & Guar Gum Prices in 2014-2015

In the Global market crude oil price are at  the lower level . On 4th august it was at six month low.  This price will effect the global energy price and that push  will further put pressure on guar gum prices.  The price fall doesn't give any sign of new investment in the Oil and Natural Gas Industry. Half of current financial has been passed , for the remaining financial year  this is last time for new guar gum demand.

Global  crude oil prices during last one month in USD 

( Source link  http://www.infomine.com/investment/metal-prices/crude-oil/1-month/  )

Currently  I am monitoring and analyzing that Guar rate are slowly going up. Investors are advised to keep away from market  this type of  abnormal behavior. as i have discussed earlier that there is no problem on supply side fro guar seed.  There are chances that speculators have again active in the market otherwise I am not seeing any reason  in increase in demand of guar gum and further price rise in this commodity, be cautious.

Global  crude oil prices during last one month in USD 
( Source link http://www.infomine.com/investment/metal-prices/crude-oil/6-month/ )

The global demand in oil and natural gas industry can lead toward increase in guar and guar gum prices. In another analysis it has found that oil and natural gas drilling / fracking companies has stoked guar gum for one year so that they can avoid themselves  from unnecessary price fluctuation. There can be minor effect due to USD / INR exchange rate, but the current exchange rate change is not sufficient to effect it. The existing contract will keep going there is low chances of new contracts in market.

Global  crude oil prices during last one year  in USD 
( Source link http://www.infomine.com/investment/metal-prices/crude-oil/1-year/ )