Guarseed Falls on Profit Booking.

Guarseed futures gained by more than 6% during the last 7 consecutive sessions due to better offtakes amidst lower arrivals in the major mandis. However, prices declined by around 3% on Thursday on profit booking. Arrivals were almost nil in Ganganagar, where stockiest are not offloading the stocks on expectations of further rise in the prices.

A record export during the FY 2010-11 is the only factor that is supporting the bullish trend in Guar complex in the current crop season (Oct-Sep 2010-11).

IMD on Tuesday, 19th April 2011 released its First Long Range Forecast which is as follows:

Forecast for the 2011 Southwest monsoon rainfall.

IMD’s long range forecast for the 2011 south-west monsoon season (June to September) is that the rainfall for the country as a whole is most likely to be Normal (96-104% of Long Period Average (LPA)). There is very low probability for season rainfall to be deficient (below 90% of LPA) or excess (above 110% of LPA).

Quantitatively, monsoon season rainfall is likely to be 98% of the LPA with a model error of ± 5%. The L.PA of the season rainfall over the country as a whole for the period 1951-2000 is 89cm.

IMD will update the above forecast in June 2011 as a part of the second stage forecast.

According to the IMD official, the distribution of rainfall could be little less than normal over the Northwest and Northeast India due to the impact of LaNina.

Arrivals & Production

Daily arrivals of Guar in the domestic mandis on an average is around 15 thousand bags since last 2-3 weeks

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

Exports which were hit drastically lower during the last 2 years, had reached record levels in the financial year ending March 2011.

According to Agriculture and Processed Food Products Export Development Authority (APEDA), Indian Guargum exports for the period April- December 2010 surged by 82% and stood at 2,79,197 tonnes as compared to 153404 tonnes during the same period last year. (Source: Apeda & DGFT).

Total exports during the financial year 2009-10 stood at 2,18,460 tonnes. Exports would continue to remain firm 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 in the intraday may extend the previous day's losses due to profit taking in the first half of the trading session: however, prices are expected to bounceback in the second half session on robust export demand. IMD, in its initial forecast has not shown any probability of deficient or excess rains for the monsoon season June - September 2012.

Thus, Guar price movement would be dependent on export demand as long as the monsoon forecast remains favorable. Prices are expected to trade in the range of Rs. 2900-3135 per qtl levels in the medium term.

Source : commodityonline.com