Guar seed cultivation area will replaced by other crops and it will shrink drastically

This year Guar cultivation area is shrinking drastically. Farmers are avoiding Guar crop after two year long downfall in guar seed. Farmers are more focused on other kharif crops than guar crop. In  rain fed area of Rajasthan farmers are preferring Moong and Moth. In irrigated area of Gnaganagar and Hanumangarh there is no irrigation and no primary rainfall. Farmer may consider Guar as prospective crop but it will be under rain fed conditions. In Haryana Farmers are replacing guar gum crop with lentil, Maize and Bajara crop.

Guar gum seed  cultivation area will go down in rain fed area.

In some rain fed area there was pre monsoon rainfall and farmers have sown Moong Moth and Bajara crop. In one 50 km long patch from Rajgarh to Jhunjhanun  there is more than 80 % sowing under Moong crop. In some patches there is Bajra crop cultivation. There was hardly any farm which is under guar crop cultivation.

While discussing with a small trader located at Haryana Rajasthan border. He said that farmers are not touching guar crop just because of  low rate of guar. Mostly farmers are putting Moong seeds Few farmers are going for Bajara Crop and hardly there is any farmer who is going to Guar crop cultivation. Local market may face a lot of scarcity of  guar seed.  Though major cultivation of Guar crop start in July as it is sown as late crop. But if major cultivation area will filled by other crop then Guar will not find space for cultivation.

Remaining farmer will also make mood same as other neighboring farmers. Arrival of Guar will dropped up to 80% in Rainfed area. As per current area Guar will share more than 10% of total cultivation area in Rainfed area. Share of Rajasthan in Guar production will increase up to 90% but total production from Rajasthan will drop down.

In Haryana Guar cultivation area us replaced by Bajara, Maize and Lentil.

Farmers in Haryana are not preferring Guar crop they are replacing Guar cultivation area with Bajara, Maiz and Lentil. Water was available in farms timely and most of cultivation is coming under these crop in Guar cultivation area. Now there is minimum chances of changes  in trends. Share of Haryana in guar cultivation area will drop up to 2-3 %. Generally Harayana is considered as supplier of best quality guar gum splits. Guar gum split and guar gum powder Industries located in Haryana will be depend on Rajasthan guar production. It can be also increase in raw material cost of industries located in Haryana. Guar gum split and Guar gum powder  industries located in Siwani will not affected but industries located in Bhiwani, Hisar and Adampur will face some supply problem.

Punjab will have very low Guar production area

In recent year Guar was cultivated in Punjab. But farmers are saying good bye to Guar. Most of guar gum seed cultivation area is replaced by the Rice / paddy crop some area has gone under Lentil and Maize. Share of Punjab in Guar cultivation area will drop down to 1-2%.

Gujarat Guar cultivation area will drop

In Gujarat farmer will also replace guar crop with other Kahrif crop like Cotton, Bajara and Groundnut. Share of Gujarat in Guar cultivation area will drop up to 7-8%. Farmers have totally demoralized with Guar seed rate in local market.

Current situation of guar seed and guar gum

Industries are purchasing Guar seed regularly.  Most of Guar split mills which are more than 4-5 years old are running in full capacity. Farmers are regularly carrying guar to mills.  Industries are processing it and selling Guar Churi, Guar Korma at higher rate. Some new industries like Guar Korma roasting, grading, cleaning and shorting has come in existence and they are using latest technology for shorting and roasting. There is full fledged export demand of guar korma and Guar churi. Guar korm is exported regularly with good demand.

There is regular demand of Guar seed in market at current rate. These industries don't want that Guar seed rate should go up. At current situation there is low demand of Guar gum.  If the rate of guar seed goes up then it will hard for them to get margin. There is also some market news that local companies have purchased the Guar Gum from market. In last week there have been  buying 3000 MT guar gum split in local market. This is a export oriented buying.

Crude oil is fluctuating and it is not maintaining the level above 50 USD. 50 USD/ barrel  is psychological level for Guar seed rate growth. Crude oil will come out from the fluctuation and it wil give support to Guar gum and guar seed prices.   

Future movement of Guar seed and Guar Gum. 

Guar seed prices will remain under pressure in next month. Once the sowing will complete then  Guar seed prices will take upward movement. Crude oil prices will be major factor which will impact  Guar seed prices.  Prices of other cattle feed production Khali, Maize, Bajara, Chapad will also give a boost of guar prices. Major factor will be prices of Soya protein.  Guar korma is used as replacement of  Soya protein. 

Fundamentally guar is very strong production side there will be unexpected down fall in quantity and quality both.  If the quality is not good then  more guar seed will require to produce the same quality of Guar gum split. Long term positions can be made  at list for  three - four months. Next year in January and February the picture will be very different.  If people go for one year positions  then there is certainly multi fold returns whether in this year or in next year. 

Up to 15th July or July contract there will be some sluggish movement but after it Guar investor will be at safe position.

With falling crude Guar Seed and Guar gum lost the Gain.

Guar gum has fallen 6.1% in last week after crude settle down below USD 50/Barrel. Guar Seed fell down from 3200 to 3050/100 Kg and Guar Gum fell down from 5700 to 5350/100 Kg.

Fundamentally Guar will face low supply and high demand during  this financial year. It looks strong at lower side with good demand from Cattle feed Industry. 

Crude will recover

Currently crude is the major factor which will predict the demand of guar gum powder. Last week crude recovered above 50 USD/Barrel and we saw good recovery in guar gum prices. Sowing of Kharif crop has been started. In irrigated area Farmers are avoiding Guar crop, they are more focused on Moong crop. In Rain fed area Farmers follow the same practice but here they are focused on Moth crop.

In the same season Govt is putting all affords to control the pulses prices. Providing higher MSP, Providing subsidies, Providing high quality seeds, using intelligence agencies, Stopped the forward trade, Planning for contract farming, Agreement for supply of pulses with foreign countries.

At another side Guar is emerging as demand driven self sustained crop. This is a major industrial crop from rain fed Area which is used to produce Guar gum powder, that is used in many industries. At production side Guar seed production will remain below 1,80,00,000 bags. The quality of guar seed produce will also poor.

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At lower side guar seed  will not break the level of 3000 and Guar gum will not break the level of 5000. Currently crude is putting pressure on guar gum prices. Crude will recover in next week with some fluctuation. In next two months it will go beyond the range of 50 USD/barrel. Once crude will come out from the zone of 50 USD then guar gum will recover very fast.

Entry point for long term investment

In next week Guar will take upward movement because investors from Chana trade will come out Bajara and Guar are only two Kharif crop which are taken in Guar growing belt and traded on NCDEX/ Forward market. There are existing prediction that Bajara cultivation area will also increase and production of bajara will also remain high, so there are no any major chances in earning in bajara contracts.

Currently guar is only crop which can give excellent return to investors as it is traded low and it is good entry point with no risk of loss.

Stocking for yearly demand by big players 

In July contract there will be buying for Guar seed and Guar gum for October, November and December contracts. There will be more buying for Guar gum and Guar seed will follow the trend on Gaur gum. Investors will make long term positions with low cultivation estimates. Once the sowing activity will finish then traders will start to work on stocking for physical stock. Quality of new guar crop will be very poor. Quality of the existing crop is better.

All the big companies will like Hindustan, Lucid, Rajasthan, Shriram, PFT, Vikas, Jai Bharat will buy a good quantity of guar seed for stocking for their yearly requirement. To sustain in market these companies will have to process the guar seed into guar gum powder..

Demand from cattle feed

Guar will gain in spot demand. All the pulses are at higher level so there is more risk of loss. Guar is an attractive commodity to invest at lower level. Guar Churi Korma is already giving good support to Guar seed prices. In the next 4-5 month there will be requirement of concentrate for dairy cattle. In Rainy period and Winter period is major milking period in cattle. All cattle feed are very costlier today. Guar is cheapest alternate.

At lower side guar is very strong. Fundamentally there will be tight supply and high demand at low price. Crude price will keep improving slowly and slowly, Demand of guar seed and guar gum  from big player will remain same. Except the Oil industry demand from other industries will improve at low price of guar gum.