Guar Seed Market Review: Near Term Price Direction Remains Positive

Guar seed and guar gum had extended the March gains during the first week of April, and the trend has been strong to date. April guar seed futures at the NCDEX breached the 6600 mark after a long time. The front-month contract had earlier breached the 6600 level in August 2021.

Presently the spot as well as front month contract prices are fluctuating between 6400 and 6600. The Ukraine-Russia war continues due to which exports of guar gum from India to Ukraine are negatively impacted. But this factor is least likely to influence much of the price movement now since the supply situation is getting tighter week by week.  Guar seed has made a comfortable breakout above the 5000 barrier in August 2021, and currently holds above the 6000 level.

Strong demand for Indian guar gum (a processed product of guar seed) supported the bullish trend, in addition to reports of fall in the net cropped area and robust usage from the carryover stocks. As per trade sources, India has been exporting around 25-30 thousand tons every month after July 2021. 

In 2020, we were struggling to export only 10-12 thousand tons every month.

The production in 2021 has fallen significantly over last year as farmers preferred sowing in pulses and oilseeds due to better prices prevailing in both. Improving domestic and exports demand has resulted in a consistent decline in carry-over inventory.

These factors have resulted in a tight supply situation for the 2022 calendar year. The prevailing offers are quite lucrative for the traders to sell in the open market, and this keeps the upside in check these days.

However, the limited availability of the commodity shall keep buyers rushing for fresh purchases whenever requirements emerge. So the price direction for the rest of the month remains in favor of the upward trend.