EU team to check guarseed quality

The visit by a team from European Union (EU) this week could prove crucial for the guarseed market in the country. Traders and market analysts believe that the commodity, which is continuously reeling under weak sentiments, will get a positive push once the quality issue is settled with the EU team.

Around a month ago, cases of poor quality were reported in guargum consignments to Europe. This led to the speculations that the EU might ban guargum exports from India. As a result, the market got a hit despite the fact that country was heading towards a tight supply-demand scenario in guarseed this season.

"The team (from EU) is expected in the country this week. We hope the issue will be settled and exports of guargum (processed from guarseed) will not be affected," said Navratan Daga, a Bikaner-based trader.

Market sources said that with main production centres of guarseed based in north-western part of the country (Rajasthan and Haryana), sending guargum samples for testing all the way to Hyderabad was not economical for traders. The samples are tested in Vimta Labs, a Hyderabad-based research and testing organisation.

"If the EU team, after visiting the production centres, agrees to allow the consignments of guarseed to be exported without lab testing, market will see a boost," said marketmen.

The actual crop estimates have not been made so far. Till a fortnight ago, output figures hovered around 65-70 lakh bags (each of 100 kg). According to Daga, the country's guarseed output could be around 80 lakh bags. Last year, the production was 75 lakh bags and the country had a carry-forward stocks of around 25 lakh bags.

"Unless arrival becomes full-fledged and picks up momentum, conclusion over output is difficult," said Tanmay Kumar Dipak, analyst with Agriwatch Commodities. He estimated the production at 75 lakh bags.

Though arrival has begun in areas such as Ganganagar and Hanumangarh in Rajasthan, market sources suggested that quality was inferior and did not meet specifications mentioned by the commodity exchanges. Crop in Jaisalmer, Jodhpur and Bikaner are in early flowering stage and arrival is likely to hit the market not before mid-November. This region of the state witnessed late sowing in absence of adequate rains.

However, as harvest nears, crop will require another spell of rains in this month to fetch a better yield. "Rains by the end of October is crucial for guarseed. But as the monsoon has moved away from Rajasthan, it seems unlikely that the region will see any fresh showers," added Dipak. Haryana, another potential grower of guarseed, could see decline in output especially from the unirrigated areas of the state.

The country is expected to be left with around 12-15 lakh bags of carry-forward stocks once the new arrival starts. With an estimated output of around 75 lakh bags coupled with a carry-forward stock of 15 lakh bags, the country will have a total of around 90 lakh bags.

This is almost equivalent to the total demand annually, said analysts. According to them, this will keep the market firm. Marketmen in Rajasthan said that the market would not go down. Reports suggest that traders in the state have voluntarily set a minimum support price for guarseed at Rs 1,600 a quintal.

In Bikaner, the market on Wednesday was firm. Rates in the physical market were being quoted at Rs 1,640-1,650 a quintal. On the National Commodity and Derivatives Exchange, the near month contract closed the day at Rs 1,701 a quintal up 1.8 per cent against the previous close of Rs 1,671 a quintal.