Guar gum prices rise 9% on speculative buying

Guar gum prices rose over nine per cent in the past week due to speculative buying and stock holding in the futures market. Traders are booking afresh in anticipation of further price escalation. Guar gum, a derivative of guar seed, is widely used in oil drilling, paper, textiles, mining, explosives, ore floatation and many other industries.

The commodity for delivery in December set a record to quote at Rs 17,166 a quintal on the National Commodity & Derivatives Exchange (NCDEX) on Friday. Guar gum hit the upper circuit almost every alternate day in the futures market this week.

“The government is contemplating a 20 per cent export duty on guar gum. If implemented, it would make the product costlier in global markets. India, being the only supplier in the world, would reap the maximum advantage,” said a Bikaner-based trader.

 

India is the largest producer and exporter of guar gum, supplying over 90 per cent of the world consumption. It produces 1-1.5 million tonnes (mt) of guar seed annually, processed into 300,000-500,000 tonnes of guar gum.

According to an official with Rajasthan Guar Gum Association, withdrawal of incentives and imposition of export duty would result in substantial revenue generation and saving to the exchequer. Along with gum, the country exports its by-products known as guar meal. Export of guar seed derivatives (gum and meal) from India has shown a phenomenal growth of 85 per cent, from 218,000 tonnes in 2009-10 to 403,000 tonnes in 2010-11.

In value terms, the rise has been even more impressive at 248 per cent (Rs 1,133 crore to Rs 2,812 crore now). During the current financial year between April and June, 145,000 tonnes of guar derivatives were exported, more than double the 71,340 tonnes in the same quarter last year.

“Uncertainties in European markets have been affecting exports to some extent but traders expect exports to pick up in the coming weeks till year-end,” said Ajay Kedia, managing director, Kedia Commodities.

The government introduced a six per cent subsidy to promote guar gum exports five years ago, when the price was at Rs 700-800 a kg. Now, prices have surged to Rs 15,000 a kg. In the last one year, these have risen 200 per cent.