Guar seed on a bull run

The guar seed futures contract on the NCDEX surged over 6 per cent from its intraweek low of ₹3,755 to test the psychological ₹4,000 mark.

The guar complex has been among the outperforming agri commodities so far this year. Guar seed has rallied over 25 per cent since January and guar gum has surged around 40 per cent.

Short supply on the back of lower acreage and an increase in export demand are the key factors that have driven prices higher. Farmers have reduced the supply of the produce in anticipation of better price realisation. Moreover, improving overseas demand for guar gum from the US is now helping the industry recover after suffering from oversupply in the last two years.

According to the Agricultural and Processed Food Products Export Development Authority (APEDA), India exported about 44,000 tonnes of guar gum in January, up 69 per cent from last year. Total exports of guar gum for the period between April 2016 and January 2017 has increased about 19 per cent to 3.22 lakh tonnes from 2.71 lakh tonnes for the same period last year.

Guar finds wide usage in the oil and gas industries of the US and China and 80 per cent of India’s exports are absorbed by these two nations. Better outlook for crude oil prices may increase drilling activities in the coming months. This may keep the demand for guar gum higher which, in turn, may support prices further.

The writer is Head-Commodity Research, Karvy Comtrade

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