Guarseed to see short term rally as demand picks up

The recent buying in the market on the back of stockists accumulating material and improved demand from the overseas market has turned guarseed market hot. However, commodity analysts maintained that the bull run may end up being a short term phenomenon.

The spot rates in Bikaner and Jodhpur — the two main centres for guarseed in Rajasthan, were reported to be Rs 1,550 and Rs 1,570 a quintal respectively on Wednesday, up around Rs 50 in the last week. “Demand has picked up for guarseed. The overseas demand is good and we expect a rise of another Rs 100 a quintal in the next one week period,” said Navratan Daga, a Bikaner-based guarseed trader.

Despite production level at the same level as of last year, at 7 million bags (each bag of a quintal), the commodity slipped into a bearish mode in November-December with spot rates hitting as low as Rs 1,350 during December end. Sources attributed it to the low demand from overseas as well as domestic market.

However, since the beginning of this year, enquiries for export orders have poured in from China and Europe stoking bullish sentiments into the guarseed market.

Normally, around 75-80 per cent of the produce is exported per annum. However, according to the commodity analysts, the exports may see some downturn this year as sudden demand is only for a short term.

Sriram Aiyer, commodity expert at Agriwatch Commodities, said, “There is lack of demand from the millers and crushers. They do not want to procure guarseed at the current high rates. They are comfortable till Rs 1,500 a quintal as they are making losses on margins.” He added that in the short term the physical market rates could see a surge of Rs 50-60 a quintal.

Reports suggest that major guargum manufacturers and suppliers including Hindustan Gum, Lucid India and Vikas WSP are into the buying spree.

Moreover, the last fortnight has seen demand for churi and kurma (by-products of guargum) coming from the domestic market as prices of soymeal is on the upside.

On the NCDEX, the March contract of guarseed closed on Wednesday at Rs 1,587 a quintal, up Rs 12. According to commodity analysts, the market can go up to Rs 1,626 a quintal in the near future.