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Guar prices surge on good exports and heavy rains: Angel Commodities Broking

Posted On: 2017-08-06 09:55:46

Views of Mr. Ritesh Kumar Sahu (Fundamental Analyst - Agri Commodities, Angel Commodities Broking):

"Guar prices have jumped about 10% in last one month due to good export demand for guar gum coupled with excessive rains in the guar growing areas of Rajasthan and Gujarat, which have damage the crop in large areas.

In futures market, Guar seed prices have moved higher by more than Rs. 300 per quintal while guar gum prices have increased by close to Rs. 700 per quintal in futures during last one month.

The most active guar contracts for October delivery at the National Commodity and Derivative Exchange (NCDEX), trade in a positive note since last two weeks. In last two weeks, Guar seed surge by 6.3% or Rs. 210 to trade at Rs. 3,632 per quintal meanwhile guar gum also jumped close to 9.4% or Rs. 676 to trade at Rs. 7724 per quintal today at 2.15 pm.

As per the data from the Agricultural and Processed Food Products Export Development Authority, India's guar gum exports for first three month of FY 2017-18 i.e. Apr-Jun almost doubled to 145,775 tonnes from 77,174 tonnes a year ago, due to higher demand from the US.

During the first two months, US imported more than 53,300 tonnes of guar gum compared to 14,653 tonnes last year. US is expanding its shale gas production which surge demand for guar gum as it is used as a fracking agent in shale gas extraction. India mainly exports guar gum to the US, Germany, Russia and China, to be used largely by the oil extracting companies.

As exports are picking up, the area under guar seed is also seen higher this season. According to Ministry of Agriculture report dated 31st July 2017, Guar seed acreage in Rajasthan increased significantly to 24.1 lakh hectares as compared to 15.9 lakh hectares in the same period last year. For 2017/18 season, Rajasthan government has set a target of 38 lakh hectares for guar. Last year, the acreage was 35.30 lakh hectares and five year average acreage for guar is 44.24 lakh hectares.

In Gujarat, Gur seed acreage stood at 1,61,200 hectares against 88400 hectares last year same period while in Haryana, Guar acreage till July second week was about 79,000 hectares as compared to 35,000 hectares same period last year.

Despite higher acreage of guar, there are reports of large scale damage to standing guar crop due to large excess rains during the last week in the major guar sowing districts of Western Rajasthan. Western Rajasthan districts like Bikaner, Barmer, Jaisalmer, and Jodhpur account for more than 80% of guar acreage in Rajasthan.

According to Indian Meteorological Department, the cumulative rainfall received from June 27 to July 2 in Western Rajasthan has been 231% of the benchmark long period average (LPA) with rains of 66.8 mm against normal of 20 mm. The distribution have been quite erratic in major guar planting districts of Jaisalmer, Barmer and Jodhpur have received excess rains of about 60.8 mm (+438%), 116 mm (+530%) and 59.2 mm (+164%) rainfall respectively."

Source: Equity Bulls

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