Guar gum dips 7% in a week on low global demand

The price of guar gum, mainly used in crude oil exploration, slumped seven per cent in the last one week, due to lower demand from abroad and high carryover stock. Guar gum is also used for food additives and textile supplements.

Biren Vakil, head of Paradigm Commodites, said: “The global slowdown in manufacturing activity, especially in China, has pulled down the overall demand for guar gum. Even, the US, the largest importer, is not faring well on the economic front, leading to concerns that demand might be lower. The commodity for delivery in September on the National Commodity & Derivatives Exchange (NCDEX) fell to Rs 13,599 a quintal on Tuesday from Rs 14,605 a quintal a week ago. Similarly, for the far-month contract for delivery in October, the commodity recorded a seven per cent decline to Rs 13,775 a quintal from Rs 14,806 a quintal.

Besides the global slowdown, other reasons for the fall in prices are carryover stock this year, which is at two million bags (100 kg each). The primary estimates of the total output are more than double of last year at 12 million bags. Though there has been a decline in the acreage to 2.75 million hectares (ha) from 3 million ha, it is still higher than the government estimates of 2.7 ha.

“Prices of guar seed and guar gum will see a further fall in prices owing to a good monsoon. Production is also estimated to be higher,” said Omji Mundra, a guar seed and guar gum trader in Rajasthan. The overall rainfall in Rajasthan, the largest producer of guar seed, was recorded higher than the long-term weighted average so far this season, which proved favourable for the crop.