Guar seed output is likely to rise 50 per cent this year due to a favourable monsoon season in the major producing states of Rajasthan, Gujarat, Haryana and Punjab.
According to an estimate by the National Collateral Management Services, an agri warehousing company and subsidiary of NCDEX, total output will be at a record 637,000 tonnes during the current crop year, against 420,000 tonnes in the previous year.
Since it’s a rain-fed crop, its yields are highly susceptible to the way the monsoon behaves in the top growing regions, which are in the country’s arid regions. This year, Rajasthan and Haryana in particular witnessed an abundance of rain, resulting in a sharp rise in crop area. In Haryana alone, sowing area this season rose 42 per cent to 244,000 hectares (ha), compared to 171,000 ha in the previous season. Sowing area in Rajasthan, the leading producer, rose 8.7 per cent from 1.72 million ha to 1.87 million ha.
|States||Area (lakh hectares)||Production (lakh tonnes)|
As a result, total acreage under guar seed shot up 13.6 per cent to 2.53 million ha this season, from 2.225 million ha in the previous season. Unlike other agricultural commodities, guar seed is relatively less perishable. So, there is largescale stocking when the market is reeling under low prices. Traders can retain stocks for more than three years and wait till the time they get higher prices.
But volatility in prices is likely to continue through this season. Guar seed prices are expected to first decline to Rs 1,800 per quintal from nearly Rs 2,000 per qtl now. However, global short supply and emergence of demand from the user industry is expected to push prices up to hit the benchmark of Rs 2,800 per qtl by December, said Hanish Kumar Sinha, head, trade and commodity intelligence group, NCMSL.
Guar seed prices zoomed by 84 per cent during the 2009-10 crop season because of crop failure. It was the second-worst ever guar production after 1998-99 in India. However, prices did not touch the record of 1998-99 as there was less demand for guar products from western countries in the wake of global slowdown.
Approximately 90 per cent of the guar crop is used to produce guar gum and the rest is used for culinary purposes and cattle feed. Demand for guar split and guar gum from foreign markets – used majorly in crude oil extraction and as a natural stabiliser - would be another major factor that drive domestic guar seed prices.
According to a study by Way2Wealth, guar gum exports are expected to be higher than the 233,000 tonnes during 2009-10. Indian guar product demand is showing a positive trend and may move up in 2010-11, as economic concerns are expected to be ease.