Guar price declines on higher seed output

Prices of guar seed fell by over 8% in two weeks to trade in January on NCDEX

The price of guar has declined by eight per cent in two weeks, due to estimates of higher seed output this year and falling demand of its derivative gum from consumer industries. There was a marginal recovery in recent days on a forecast of delay in new crop arrivals.

The price is now Rs 4,420 a quintal for delivery in January on the National Commodity & Derivatives Exchange (NCDEX). Guar gum fell 10 per cent in two weeks, to quote at Rs 12,050 a quintal for delivery in January.

“Export demand of guar gum, used primarily in oil drilling and other industrial activities, continues to remain weak, impacting the price of the seed, too,” said Ravikant Kanungo, director of Hindustan Technosol, a Jodhpur-based gum exporter.

The drop in prices of both began a month earlier, on the back of weak export demand and a higher crop estimate. The area under seed went up this year due to a good monsoon and the production is estimated (also due to better yield) at 2.5-3 million tonnes, compared to 2.1 mt last year. Farmers also increased sowing as the price of both seed and gum were on the higher side.

Farmers have been offloading seed stocks in the past fortnight as they fear prices will fall further. Analysts expect the price of seed to move below Rs 4,000 a qtl. Daily arrivals on the spot market is around 40,000 tonnes, compared to 20,000-25,000 tonnes a fortnight earlier.

Local demand for gum from the food and cosmetic industry has been supporting prices to a certain extent but the bulk of export demand is down. Many importers of the gum have  huge inventory. Crude oil prices are also on the lower side, which has impacted gum prices.