Guar gum exports from India are expected to be at record high in the current year amid robust demand from oil producing countries. The soaring overseas demand is believed to spurt the prices of the commodity, which is used as a lubricant in exploration wells and also used for fracturing of oil wells.
According to the latest figures provided by Agriculture and Processed Food Products Export Development Authority (Apeda), so far India’s guar gum exports for the period April-December 2010 surged 82 per cent to 279,197 tonnes as compared to 153,404 tonnes recorded during the same period last year. The rise in exports has come as a booster for the gum prices, which have shot up to Rs 9,050 a quintal in the Bikaner spot market - one of the prominent markets for the commodity. Prices have gained nearly 12 per cent in the past one month.
At present guar gum prices are hovering in the range of Rs 8,700-9,050 a quintal at Jodhpur and Bikaner markets, the industry sources informed. Besides higher overseas demand, low carryover stock also led to the rise in the price of the commodity.
Market participants informed that the carryover stock of guar gum had reached a record low level for the current year, which may trigger prices to shoot up further. “Demand from oil exploring countries is high as crude prices have sustained higher levels. As long as crude prices stay above $90 per barrel, we see robust demand for guar gum in the overseas market. Also, the carryover stock is expected to be around 150,000 tonnes - a record low in the past 10-12 years. So, there is no indication of any fall in prices in the near future,” said a leading guar gum trader and exporter from Jodhpur.
“Guar futures are expected to recover on robust export demand. The India Meteorological Department (IMD), in its initial forecast, has not shown any probability of deficient or excess rain for the monsoon season June-September 2012,” said Ajay Kedia of Kedia Commodities.
Meanwhile, industry insiders also hinted at a possible speculative trading taking place in guar gum, which was artificially keeping the prices up. “There is a record high production of guar gum this year. In spite of this, the price trend has remained bullish. Though there is high demand from overseas markets but the commodity has become highly speculative now, so there can’t be any certainty about the future price trend,” said a Palanpur-based trader.
India is the largest producer of guar gum in the world and exports nearly 70 per cent of its produce to the oil producing countries including Gulf countries, the US and European nations. Exports are expected to remain firm owing to an increase in demand from the oil sector with the rise in crude oil prices and lower supplies from Pakistan, the second-largest producer of guar seed as its crop was destroyed due to floods.