Guarseed and guargum have really been rocking in the commodities market since the beginning of the year. Guarseed has gained nearly 65 per cent, while guar gum, a derivative of the seed, has nearly doubled.
After being quoted at Rs 2,360 a quintal at the beginning of the year, guarseed on Wednesday closed at a record Rs 3,900, a gain of 62 per cent since January 1. In fact, over the last few weeks, guarseed prices have been recording new highs every day. On Tuesday, it closed at Rs 3,892.
On the National Commodities and Derivatives Exchange (NCDEX), guarseed prices were marginally down on Wednesday. The July contract closed at Rs 3,892, while August ended at Rs 3,962 and September at Rs 4,011.
Guar gum, on the other hand, ended lower on the spot market and NCDEX. Guar gum spot closed at Rs 12,457.90 a quintal from Rs 12,462 on Tuesday. At the beginning of the year, it was quoted at Rs 6,344.
On the NCDEX, the July contract closed at Rs 12,249, August ended at Rs 12,450 and September at Rs 12,677. In fact, contracts beyond September gained.
Export demand
“Export demand has really kept guarseed and guar gum zooming since the start of the year.
Data available for the April-February period of last fiscal show exports increased 84 per cent during the period compared with the same period the previous year,” said Ms Vedikar Narvekar, Senior Research Analyst with Angel Commodities.
According to Commerce Ministry data, guar gum exports increased to 3.52 lakh tonnes (lt) from 2.18 lt a year ago. In terms of value, they were up 140 per cent to Rs 2,360 crore.
“The current rise in guarseed and gum is due to poor coverage of monsoon in the growing areas. West Rajasthan areas where guar is grown is particularly rain-deficient. Though area under guar has gone up, it is in irrigated areas,” said Ms Narvekar.
West Rajasthan growing areas comprise Barmer, Jaisalmer, Jodhpur, Nagaur, Churu, Bikaner, Ganganagar and Hanumangarh districts and rain deficit in these areas is 37 per cent.
According to the Rajasthan Agriculture Department, area under guar has increased to 24.8 lakh hectares this year against 10.5 lakh hectares during the same period a year ago. The State has set a target of 30 lakh hectares for guar cultivation.
According to a report from NCDEX, area under guar has gone up mainly due to record prices for the crop. “Prices of crude oil ruling above $100 a barrel for the last few months have also contributed in a big way to the rising trend in guarseed and gum,” said Ms Narvekar.
Uses and applications
Guar, a leguminous crop, is primarily grown in Rajasthan, besides Haryana, Punjab, Gujarat and Madhya Pradesh. Rajasthan accounts for 70 per cent of the total crop in the country. Guarseed is a raw material for producing guar gum. Guar gum is used as a thickening agent and additive in food products such as instant soups, sauces, processed meat products, baked goods, milk and cheese products, yoghurt and ice-creams. It has industrial applications in the paper and textile sectors, ore flotation, explosives manufacture and fracturing of oil and gas formations. India is the major producer of guar seed and gum, accounting for 80-85 per cent of the total global supply.
Record prices
“Guarseed prices, in the short-term, could easily rule above Rs 4,000 a quintal,” she said. “Lower stocks of guar seed and guar gum as a result of export demand support bullish market sentiments,” the NCDEX report said. The bullish run in the guar counter has come notwithstanding a record 15.46 lt production during the current crop year that ends this month. Last year, production was estimated at 4.5 lt.