Export demand likely to fuel guargum prices

Guargum is likely to rebound and hit Rs 5,100 a quintal by early May on renewed demand from the export market.

Prices declined by 10 per cent in the last fortnight, on concerns over the government's likely move to reframe the contract specification. Last week, Minister of State for Industry and Commerce Jairam Ramesh had said the government had received several complaints regarding the futures trade of guargum.

Despite a higher guarseed production estimated this year, prices were not likely to fall because of rising overseas orders, said a Jodhpur-based trader. Traders in Jodhpur on Monday booked export orders for 4,500 tonnes.

Favourable climatic condition is set to result in a bumper guarseed production this year at about 100 lakh tonnes, up 28 per cent from the last year. Of the total production, roughly 29 per cent is processed to manufacture guargum.

In the spot market, the price has started moving up. Guargum in Jodhpur, a major hub in the country, rose by Rs 20 to Rs 4,750 a quintal on Monday.

The May contract on the NCDEX closed on Monday at Rs 4,600 with a gain of Rs 17 from the previous close, but approximately 10 per cent decline from Rs 5,242 on April 14.

According to commodity analysts, the demand in April and May will be strong on the export front. It is expected that guargum would trade at the upper level of Rs 5,000-5,100 a quintal.

Market sources did not rule out the possibility of prices touching Rs 5,200 a quintal in the near future. They added that millers had healthy book orders till April.

The global guargum market is estimated to be around 250,000 tonnes, with India and Pakistan accounting for 70 per cent. The US consumption is estimated to be around 40,000 tonnes a year. India's annual exports are around 115,000 tonnes, with the domestic market consuming about 25,000 tonnes.

Pakistan, Sudan and parts of the USA are the other major guar-growing countries.