Guar Seed: Steep Price Upsurge Expected after Massive Plunge

 Supply & Demand Scenario

India continues to be the leading producer of guar seed in the world with a total share of over 80-85 per cent of the global supply. The country’s guar seed production for the year 2012-13 is estimated to be 1.6 million MT against 1.25 million MT last year. The biggest producer of guar seed in the country continues to be Rajasthan (83.37 per cent) followed by Haryana (13.08 per cent). Other major producers of Gaur seed in the country are Gujarat (3.38 per cent), Punjab (0.18 per cent) and Uttar Pradesh (0.09 per cent). The opening stock for the next season will be 60 lakh MT while the total supply is estimated to be 2.0 to 2.2 million MT.

The consumption pattern of guar seeds is largely influenced by the demands from the petroleum industry of United States of America and the oil fields in the Middle East as the derivative products of these seeds are quite useful in the petroleum drilling industries.  The USA is the largest consumer of guar gum with an annual consumption of 45,000 tonnes which represents 25 per cent of world trade. Germany & Japan consume another 23 per cent with the UK, Denmark and the Netherlands combining take further 22 per cent of world trade. With the recent surge in the prices of guar seed to over Rs. 25000, the major importing nations have resorted to new synthetic products leaving the guar exporters in a fix.

Price Trend Analysis

The guar seed spot market price variation study indicates that the prices have always been declining since the re-launch of the futures trade in Indian Exchanges. Exports which touched record 7.07 lakh MT in FY 2011-12, declined in FY 2012-13 as US, the largest importer of Guar gum has stocked huge inventories. During the FY 2012-13, guar gum exports stood at 4.58 lakh MT during April 2012-February 2013. This situation is likely to change in the coming months as the prices have already corrected over 60 per cent in the recent months. The market is also finding support from the traders owing to increased demand from the stockiest and global industries. The Indian market is expected to find strong support at the levels of 3900-4000 and has good potential of reaching 7000 and 9000 on the higher side.