Guarseed Gains On Export Demand.

Guar complex continued to add to the gains of the previous day on Wednesday owing to better exports from India during April to November 2010. Prices in the last few trading sessions (till 7th March 2011) were trading bearish.

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.

Guar gum prices have breached its record high levels of $1700 per tonne made in the year 2000 and touched almost $2100 per tonne recently. High 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.

The Special Margin of 20% (inclusive of 5% cash margin) on the Long side of Guar Seed (Symbol: GARSEDJDR) and Guar Gum (Symbol: GARGUMJDR) shall be reduced to 10% out of which 5% will be collected in cash effective beginning of trading day March 09, 2011.

Arrivals & Production

Arrivals of Guar seed daily are around 20,000 bags since past few days as compared to 30000 bags in the last week of February.

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 are expected to trade on a firm note in the intraday on higher export figures. Also, reduction in the margin of Guarseed and Guargum on the long side may lead to increased participation of the buyers in the futures market.

In the short term prices may trade in the range of Rs.2750 and Rs. 3050 per qtl.

In the medium term (2 months), prices would be dependent on the overseas demand scenario.

Source : commodityonline.com