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

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. 

Post Diwali Guar Gum Seed arrival has increased in Rajasthan.

Post Diwali Guar Seed arrival has increased in physical market market .It has reached up to a level to 1,50,000 bag / Day. It wiill reach up to 2,00,000/ day. Don,t be worry it is peak arrival time. The situation will be remain tight in coming three- four months. Guar rates are going down and down ... it has reached 5100 in spot market. In remote locations it is traded at 4500-4600 / 100 Kg. The rates will keep falling below 4000/Kg.

1. 20/10/2014     - 92583  Qt
2. 21/10/2014     - 54190  Qt
3. 22/10/2014      - 23759  Qt
4. DIWALI GAP
5. 27/10 /2014    - 42572  Qt
6. 28/10 /2014   - 92091  Qt
7. 29/10 /2014   - 93695  Qt
8. 30/10 /2014   - 94025  Qt

Above quantity is only the seed arrived in Market  (Mandi ) . It is showing a clear trend.  It is not the actual , actual will me more multiple time as local unregistered agent are engaged in Trading and engaged in supplying directly to Factories..

Post arrival guar seed arrival has increased in Rajasthan.

Guar is under double pressure....

• No more speculative and premium rates
• The production of other commodity are less.

After a lot UP and Down market stabilizes and rates correct automatically. Like Gold and Crude.Not a surprise if Guar dip below the red line of 4000/ Qt  in future market. in some MANDI rate of guar is coming around 4500/Qt and 4600/Qt.

Rates will improve after February and March but not too much only just because of peak arrival time will be over. 

Advance estimate of Guar gum ( Guar seed) Crop production - Year 2014-2015 in Rajasthan is negative in comparison to last year.

As per advance estimate data of Guar gum ( Guar seed)  Crop production -  for year year 2014-2015 released by state government is totally negative and it show that there will be sharp decline in the guar production.

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

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

1                  2011-12                3'095'869                          1'847'713                                  597

2                  2012-13                4'526'368                         2'023'096                                447

3                  2013-14                5'071'099                         2'863'055                                 565

4                  2014-15                3'212'965                         1'339'806                                 417

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

All three factors Cultivation area, Production and productivity (Yield) of this year are lowest in last four year. These data are for Rajasthan State Only.

( CROP WISE ADVANCE ESTIMATE OF AREA, PRODUCTION AND YIELD - 2014-2015 

( Guar data  in red highlighted row ) 

In initial estimate of sowing area were showing positive pattern.  But first estimate of production is negative. There is 53 % drop in production as compare to last year. There is 36 % drop in cultivation area as compare to last year. There is 26 % fall in yield or productivity.

( LAST YEAR AREA, PRODUCTION AND YIELD OF DIFFERENT CROP-2013-2014 ) 

                                                                   ( Guar data  in red highlighted row ) 

Last Two year there was good sowing and bumper crop due to favourable climatic condition from first rainfall to maturity.  If we compare these data with 2011-12 then situation is normal. Year 2011-12 was normal in context to Guar production.

The final picture will come after harvesting and commodity arrival in market but initial picture is not good.

Final condition of guar seed ( Guar Gum ) crop after return of manson

Manson is over from most of guar growing belt.  There are minimum chances of any major rainfall. Guar gum ( seed ) crop conditions are clear now. In this year production will be normal there is no any news of major crop damage. In Haryana there can be some damage due to excessive rainfall, but that will be in the limit of 10%. Overall Haryana produce 20-22 % of total Indian guar production so the 0 % variation will be not more than 2 - 2.2 % of total production.

Some people can compare this year (14-15) production with last year year (13-14) production. Last year production was bumper in timely rainfall condition.  This year production of gaur will be above the normal.

There were drought conditions initially.  Sowing started very late.  This drought condition gave an option to farmers to grow guar instead of other water intensive crop like cotton, paddy in irrigated area of Haryana, Ganganagar, Hanumangarh and Bikaner.   In rain fed  area situation was in the same direction , farmers of Rain fed area  preferred Guar crop over the other crop like Bajara ( pear millet) , Moong (Green Gram) Moth .It is  

The late rainfall was sufficient for sowing. After sowing there was a long dry period, which was very critical condition but it saved guar crop from any disease and pest attack. In mid of cropping season rainfall was very low but it was on regular interval as per required. In this condition vegetative growth of plant didn’t effected too much.

 

Last rainfall was also normal.  It was heavy in some part especially in Haryana. In cotton growing area, due to heavy rainfall and regular irrigation there was condition of water logging and disease outbreak. But due to short rain fall period, it improved very fast.  There is news of minor damage against the fear of heavy damage. Guar crop affected least in adverse climatic conditions. Early sowing crop will be ready to harvest if weather conditions are clear with high temperature, the crop may mature within 10-15- days.

Late sowing crop way take time.  it may mature around last week of October especially in rain fed area. Crop is in good condition. Now there is no requirement of water or rainfall. Crop need clear weather and bit high temperature to mature timely.

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..  

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/ )