Guar Seed Likely to Bring Good Returns for Farmers & Processors

It has been a long waiting period for growers as well as processors for guar seed. Market had been range bound and subdued since the past two years and the market situation has improved in the recent weeks only.

Between 2019 and till date, prices had been moving within the 3700-4500 range. The market was affected from the latter part of 2019, because of weakening demand for Indian guar gum (a processed  product of guar seed which has a greater presence in the Crude Oil Industry, especially for its application in shale oil fracking operation). In 2020 the outbreak of the COVID pandemic made the situation even worse for the Guar seed industry. Demand from the oil rig companies where usage of guar gum to extract oil is higher, nearly halted.

TRADE VOLUMES IMPROVES IN JULY:

The demand situation and trade environment has started improving in the last few months with crude oil’s long term turning positive and exports resuming slowly. Improving crude oil indicates brighter prospects for exporting guar gum from India.

As per trade sources, India has been exporting around 25-30 thousand tonnes evert month since the past few months. Last year we were struggling to export only 10-12 thousand tonnes every month. Guar prices have stabilized during the first week of July and started appreciating July 12th onwards and currently the offers in the major mandis of Rajasthan are being offered between Rs.4250-4300/qtl, up nearly Rs.150-200/qtl when compared with the June-end prices.

Rajasthan contributes nearly 72% of world’s guar production. Domestic buyers are also negotiating the trades quite frequently, sensing improving price outlook.

FARMERS/PROCESSORS MAY RECEIVE BETTER RETURNS IN COMING WEEKS:

Production in recent years has dropped significantly as farmers preferred sowing in pulses and oilseeds due to better prices prevailing in both.  Already sown area is dropping since last two years and inventory has also fallen in 2019-2020 (5 Lakh tonnes approximately) versus 2017-2018 and 2018-2019 (around 9-10 lakh tonnes during these years). As domestic and overseas sales have improved lately and are expected to improve further, there will be consistent utilization of the inventory in near future.

Guar is a short duration crop and mainly rain fed, therefore requiring no irrigation, and cultivated in Rajasthan & Haryana states mainly.  This year, most of the producing regions of North Rajasthan and Haryana could not receive adequate rains during June therefore farmers are concerned about fall in production over previous year.

Talks are heard regarding sowing pace to drop because of rising possible shift in the acierate towards oilseeds, cotton or pulses. These crops had provided impressive returns last year therefore the planting intentions remain better as compared with the guar seed crop. The price levels are quite cheaper at present - be it export offers or the mandi prices. In all, the likelihood of earning good returns by the farmers, and processors (who produce guar gum from guar seed) has increased now.