Guar Seed Markets Likely to Surpass 2021 Highs

Guar seed could finally come out from a long consolidation phase. It has been a long waiting period for growers as well as processors for guar seed. Markets had been range bound since the past two years and the demand situation improved in 2021. Between 2019 and the first half of 2021, the commodity had traded within the 3700-4600 range.

The commodity made a comfortable breakout above the 5000 barrier in August 2021, and still remains much above this 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. 

The bullish momentum eased between November and December due to increase in the new season arrivals but year on year, the commodity is up roughly 53 percent.

Guar seed futures had experienced a consolidation phase for more than 2 years, trading within the 3700 and 4600 range. A comfortable breakout above 4600 was observed in August 2021 and the trend has been bullish, until now. The ending inventory is expected to fall by 20-25 percent year on year. The domestic and overseas consumption are likely to improve further in 2022. Hence there will be consistent utilization of the inventory in forthcoming months. This year, most of the producing regions of North Rajasthan and Haryana could not receive adequate rains during June.

Additionally, the acreage had fallen drastically because of a shift in the planting interest towards oilseeds, cotton or pulses. These crops had provided impressive returns last year. The production declined by nearly 40-45 percent over last year. Overall, guar seed view is bullish for 2022, on expectations of fall in production, higher consumption, lower carry forward stocks versus last year.