Guar likely to stay firm on rain forecast

Guar seed and guar gum spot and futures prices are likely to remain firm in the week ahead on forecast of subdued rainfall in Rajasthan along with talk of a slight crop damage in Haryana, traders and analysts said.

Rajasthan is the biggest producer of guar seed in the country, followed by Haryana and Gujarat.

India Meteorological Department has forecast slow down in rainfall activity in most parts of key guar-growing regions of Rajasthan in the next few days.

This has prompted traders to purchase at lower levels as they fear low rains may hit crop yield, said Suresh Mantri, analyst at Ventura Commodities.

Guar seed needs frequent three-four spells of rainfall for its good growth. But with weakening monsoon in the state, there is high possibility of a slight fall in crop output for 2008-09 (October-September), a Jodhpur-based trader said.

Meanwhile, there is talk in the markets that heavy rains in Haryana in the past few weeks have caused slight damage to guar seed crops, a factor that could keep the prices firm.

“However, the actual loss of crop in Haryana is still to be assessed,” Mantri said.

Guar prices are also seen recovering on the back of improving export demand for industrial guar gum as oil companies plan to increase drilling of wells, traders said.

Guar gum is used as a lubricant in drilling and fracturing of oil wells.

“In the week ahead, September guar seed contract on NCDEX is seen testing resistance at Rs 1,850 and may find support at Rs 1,670 level,” said an analyst with Motilal Oswal Commodities.

September guar gum contract is seen testing support and resistance at Rs 4,280 per 100 kg and Rs 4,520 levels respectively, the analyst said.

Spot prices are also seen rising tracking firm trend in futures and good domestic demand for guar gum, traders said.

On Monday, guar spot prices in Jodhpur were up on cues from futures market, which rose because of short covering in near-month September contract, traders and analysts said.

In Jodhpur, guar seed was at Rs 1,766 per 100 kg, up Rs 18 from Saturday, while guar gum was at Rs 4,438, up Rs 70, according to NCDEX data.