Dealing room check: Positive outlook for guar gum

Guar complex futures witnessed a sharp 5 per cent gain last week on the back of speculative buying and better export outlook for guar gum. Delayed sowing amid crop damage concerns in some parts of western Rajasthan also helped the prices. Most active guar seed contract traded on the NCDEX moved up by 5 per cent to close the week at ₹3,739 per quintal. Similarly, the NCDEX guar gum futures for October delivery was 8 per cent for the week and has closed at ₹7,942 per quintal.

Firmness in guar futures is likely to remain intact as the export demand for guar gum picks up. Supply has dropped in recent days, while millers who were avoiding bulk buying earlier have now indulged in fresh buying as result of an increase in export enquiries for gum.

Surge in exports

As per the data from the Agricultural and Processed Food Products Export Development Authority, India's guar gum exports for first three months of FY 2017-18 almost doubled to 145,775 tonnes from 77,174 tonnes a year ago, due to higher demand from the US. Total guar gum export from India has surged by 130 per cent (year-on-year) till May in 2017-18, as India exported 1,07,458 tonne, while about 46,691 tonnes were exported last year over the same period.. However, subdued demand for guar meal may be an area of concern as higher GST on guar meal has led to substantial fall in overall demand of guar meal.

During the first two months, the US imported more than 53,300 tonnes of guar gum compared to 14,653 tonnes last year. As the US expands its shale gas production, the demand for guar gum will surge as it is used as a fracking agent in shale gas extraction.

The writer is Head-Commodity Research, Karvy Comtrade

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