Will guar gum bounce back and regain past glory?

Analysts see a brighter outlook with rising prices, and higher export volumes

There are initial signs of guar gum regaining some of the ground it lost in recent years.

A processed commodity made from guar seed, it was the top agricultural commodity in the export basket during 2012-13, of $3.9 billion (Rs 26,000 crore). It is used in extraction of shale oil and at the time, with the price of crude oil right up, it was hugely in demand. With the price of oil slumping, it lost a lot of ground; it is now at 10th position in the agri export basket.

However, from the start of February, its price on the National Commodity and Derivatives Exchange has surged 28 per cent. In quantity, its export has seen growth in the first three quarters of the current financial year.

Revival of shale oil wells in America has helped. Several shale oil fields have resumed production or have raised it, with crude oil trading consistently for months above $50 a barrel, making it viable.

Anuj Gupta, head of commodities research at Angel Broking, said: “In February, prices started to recover steeply on good export demand in the US, where the oil rig count is increasing after President Donald Trump emphasised on boosting the country's energy sector. Gum exports in December were the highest in 23 months at 42,585 tonnes, 34.6 per cent more than November and 20 per cent higher than last December.”

However, guar is a kharif crop and mostly depends on monsoon rain for its moisture requirement, as it is grown in the arid and semi-arid regions of Rajasthan, Haryana and Gujarat. Ajay Kedia, director, Kedia Commodities, says: “Guar seed sowing might be impacted if the (adverse) El Niño (weather phenomenon) strikes. In any case, farmers have been staying away from sowing of guar because comparable returns from the commodity are not so good.”