Guar seed and gum prices are expected to climb on the back of lower carry forward stock, thin market arrivals and sustained overseas demand, trade sources said.
According to an analyst attached to the commodity research firm Motilal Oswal, seed prices ruled at Rs 1,940 per quintal at the spot market in Jodhpur on Thursday while gum prices hovered at Rs 4,600-4,625 per quintal. The analyst said the seed price is expected to touch Rs 2,100 in the next 2-3 months while gum prices to surge to Rs 5, 200.
According to industry estimates, carry forward stock of Guar seed in 2007-08 crop year stood at 25 lakh bags (100 kg per bag) compared to 44.88 lakh bags a year ago and 66.96 lakh bags in 2005-06.
Carry forward stocks are declining in recent years due to increase in exports. The exports of Guar gum have increased to 1.80 lakh tonne in 2006-07 from around 1.10 lakh tonne in 2002-03.
In 2007-08 the exports are expected to touch 2.10 lakh tonne of gum (one quintal of gum could be crushed from 3.3 quintal of seed) while around estimated 50,000 tonne consumed in the domestic market, increasing demand for the commodity. The total production stood at 85-lakh bags of Gaur seed in 2007.
Looking at the current trend, the next sowing season starting June-July is expected to start with a lower carry forward stock of around 18-20 lakh bags of seed.
In addition, different market yards in the country are currently witnessing meager 8,000-10,000 bags of arrival per day on the back of off-season. Physical demand continues to be robust on the back of sustained demand from the overseas markets. Moreover weakening rupee also has forced exporters to buy at spot markets to book more profits.
In fact world market for Guar gum is estimated to be around 2.2-2.5 lakh tonne, 90-92% of which is produced by India and Pakistan. As production in Pakistan declined in recent times, customers of the neighbouring country have turned back to India, a report by Motilal Oswal said.
The major importing countries of Indian guar and its derivatives are the US, China and European Union. The US is the largest consumer of guar gum with an annual consumption of around 70,000-75,000 tonne, representing 30% of world trade.
