Sluggish Trend continues in Guar complex - trade prospects to improve in Future

Guar markets continue trading with a sluggish note. Still fundamental factors are in favor of better price realization for traders, farmers and the processors. Last year’s carry inventor had increased significantly due to the corona impact, which is currently checking the possibility of any sharp upside.

Already the sown area is dropping in 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 two years). As prospects of upside price movement in Crude oil remain bright, exports of Guargum can receive a boost from India. Gur gum, a processed product of Guar seed, has a higher export demand due to its utility in the Crude Oil Industry. 

Markets in near future shall depend largely over export related leads. Since the export demand possibility of Guargum from the US shale drillers has increased, the market participants i.e. Farmers, traders, stockists, and processors will be keen over fresh reports on this front. Guar seed production over the year has dropped considerably in recent years as farmers preferred sowing in pulses and oilseeds because of better prices prevailing in both.  

As physical markets have gone down reasonably now, most traders are not expecting much fall. Sellers will not be interested to trade at current offers therefore we may not see much decline in the market offers in near future. The previous year’s seed inventory has been sold to a great extent, and it is mainly the guar gum inventory that is preventing prices to move up. It will take few more months for this carry over supply to get absorbed. Therefore the sluggish trend may continue in the short run, and a sharp upside rally can be observed after the first/second quarter of this year. 

Traders and mandi persons do not expect spot prices to go below 3700/3800 in near future. Upside potential on the other hand remains quite high. In all, the year 2021 looks promising for traders, farmers and the entire guar seed industry, in terms of getting better prices, as business prospects turn better.