Can poor monsoon lead to increase in Guar prices ?

The monsoon has already delayed in guar growing belt. Most of  guar is grown in rain-fed conditions. Guar cultivation area will shrink this year. Most of  first sowing has been destroyed due to drought in rain fed guar growing belt. As per weather report there are chances that there can be drought this year. It is clear that guar production will decline this year. There can be  gap between demand and supply.

This gap will work as vacuum in the market, which can further lead to increase in guar seed rates. There are chances that rate of guar can be increase up to 10,000 /100 kg.  in normal condition we can expect 7000-8000/ 100 kg.  

It is expected that within three days, monsoon wills started to cover western part of India, which is  major guar growing belt. Currently there are two crops  one crop which has been sown in the month of June, this crop has affected widely  just because of delayed monsoon.  Another crop, which will be sown in this monsoon. 

In  irrigated area, crop is standing in good condition and monsoon will lead to good harvest. Problem is rain fed area, sowing has been delayed due to late monsoon or first crop has been been destroyed. This condition can lead to the another sowing . 

As per price is concerned the rate will be remain in between the bracket of 4000 to 8000. Only an abnormal vacuum can lead to abnormal price rise. There are low chances in speculation and unfair stocking activity, Central govt is regularly monitoring the stocking activities. 

Trend of commodity market is also under direct lenses of  govt regulators. There is not any major chances of unexpected price rise. Price will settle down with in 10-15 days. There is possibilities that from next month rate will come on regular track.

Guar Gum Exports Data From India 2013 - 2014

Guar Gum Exports Data From India  

		Year 2013-14
Sr No.	Country	Quantity ( MT)	Value (Rs in Lacs)
1	U S A	3,32,247.36	8,52,871.81
2	China P Rp	56,968.17	96,789.37
3	Germany	16,956.65	33,222.12
4	Russia	10,970.50	30,067.14
5	Canada	8,736.38	22,132.47
6	Italy	21,296.95	16,452.29
7	Netherland	3,731.58	8,650.00
8	Brazil	3,096.09	8,568.22
9	Egypt A Rp	29,454.03	7,258.57
10	Indonesia	12,681.17	6,811.05
11	U K	3,211.47	6,522.05
12	Argentina	2,328.24	6,051.80
13	Japan	2,842.25	5,733.91
14	U Arab Emts	2,300.65	5,156.83
15	Latvia	10,905.60	4,391.95
16	Australia	1,721.70	4,136.18
17	Malaysia	12,913.39	3,959.98
18	Turkey	8,656.84	3,888.93
19	Switzerland	1,621.00	3,403.33
20	South Africa	1,593.00	3,382.73

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.