Will guar seed ( Guar gum ) give good return this year 2017-2018 ?

During last three years Guar was under pressure of major factors like over production, Poor demand and poor crude oil prices. As commodity Guar gave a good return during last year. Last year arrival prices weer around 3200/ 100 Kg and it went up to 4200/100 Kg . During last year there was around 30 % hike in prices. This year it is expected that Guar will give good return.

( a) Low Cultivation Area ; This year total guar cultivation area was around 36,00,000 Hectare. Most of area was from rainfed area. Where productivity remains around 200 Kg per hectare or lower. As per inputs from different sources Total production of guar is expected to around 70,00,000-72,00,000 Bags.Crop was poor in comparison to last years. 

(b) Poor crop.  : This year climatic condition for guar cultivation was poor. Rainfall distribution was not equal . Most of cultivation area was under rain fed condition. In earlier some are was under irrigated conditions so production was not so bad in those area. Weight of seed is also poor. It will impact the recovery of guar split from guar seed.

(c) Improving crude oil prices : Crude oil  prices is major fundamental factor toward the demand side. if prices of crude oil goes up then it will impact new oil drilling activities in USA and Other new countries. It is expected that demand of Guar gum will increase with improving crude oil prices. It is moving toward USD 70 per Barrel.

All the factors are positive for guar commodity. Comparatively Guar will give good return in comparison to other kharif commodities.

How long Guar seed and Guar Gum will perform well ?

Guar has performed very well in Month of August. It has recovered more than 20%. This recovery is still going on.  In August and September there will be no settlement in Guar contracts. Next settlement will be in October.  There will be no settlement pressure up to next two months. Investors are making positions due to news of poor crop and uneven rainfall. Crop has damaged in some area due to heavy rainfall/ flood. In Some area, it is being damaged due to poor rainfall. 

Cultivation area is already low due to poor performance e of commodity in last years. Farmers of irrigated belts has switched to cotton specially in Punjab, Haryana and Ganganagar belt.   Kharif pulses are replacing in rainfed area. Increasing prices can attract guar in reaming sowing time.  Crop condition is poor in traditional guar growing belt.

Increased figure of current year export of Guar gum is a positive factor for investment in Guar.  115 % growth is noticed in export of guar in first quarter of current financial year in comparison to same quarter of last financial year. Speculators are also positive about Guar now.  By the next week guar will cross the level of 4000/100Kg. New crop will arrive by the end of October. Recovery in guar will continue up to October with current climatic and market condition. 

Production of seed is also expected to remain poor quality this year. In that case guar gum recovery will be low from guar seed. Consumption of guar seed is also expected to increase. Once it will cross the level of 4000 then there will be some selling pressure. Once it will cross 4500 level then selling pressure will come down and buying will start it will move toward 5000 level.  Climatic condition and cultivation condition are very crucial for guar in next two months.