Guar seed gains on export demand.

Guar seed and Guargum spot prices continued to add to the gains of the previous day and ended 3.52% and 4.71% higher w-w on account of fresh export enquires. Guar and guargum futures also settled 1.83% and 3.29% higher respectively yesterday owing to improved buying at lower levels.

Guar gum prices are trading at record high levels of owing to robust demand from the oil exploration sector and poor supply from the limited number of producers (mainly Pakistan) have led to this rally in the Guar gum prices.

As per the Directorate General of Foreign Trade, Guar gum exports during the first 8 months of the financial year 2010-11 increased 76% compared to the same period last year.

Arrivals & Production

Arrivals on Saturday stood at 25,000 bags same as that of Friday. According to the Rajasthan farm Department, Guar seed output in Rajasthan in the current season is estimated at 14.9 lakh tonnes. The forecasted Indian output this year is much higher than the 4.5 lakh tonnes of 2009-10 and 9.5-10 lakh bags in 2008-09.

India is the largest Guar producing country in the world contributing 80% in total supplies followed by Pakistan with 10% share in world production.

Exports

Indian Guargum exports for the period April- November 2010 stood at 2, 27,757 tonnes, up 76% compared to 1, 29,316 tonnes during the same period last year. (Source: Apeda & DGFT).

Total exports during the financial year 2009-10 stood at 2,10,000 tonnes. However, in the current year, market participants are expecting exports to cross 3, 00,000 tonnes owing to an increase in demand from the oil sector with the rise in crude oil prices and lower supplies from the second largest Guar producing country, i.e. Pakistan because of floods.

Outlook

Guar futures may extend the previous week gains and trade positive on higher demand amidst steady supplies.

In the medium term (1month), prices would be dependent on the overseas demand scenario. Prices are expected to trade in the range of Rs. 2900-3075 per qtl levels in the medium term.

In the long term, the trend in Guar complex would depend on the first long range forecast for the monsoon season 2011 which would be released by the weather department in mid of April.

Source : commodityonline.com