Guar gum prices surge 7.95%

High export demand seen as trigger

Spot guar gum prices appear to have broken the tight range that it were trading in over the past three months with prices rising to Rs 4,750 per quintal on the Multi Commodity Exchange (MCX).

In contrast, between mid-December 2005 and up to March 10, 2006, spot guar gum prices were traded between Rs 4,400-4,550 levels on the exchange, an increase of 7.95 per cent.

The open interest position for the commodity on the MCX has reached 17,000 tonne as compared with 5,000 tonne at the end of the first week of February this year. Guar gum is a by product of guar gum seeds.

Meanwhile, spot prices of guar gum seeds too have shot up over the last few trading sessions to Rs 1,735 on the commodity exchanges.

Analysts tracking guar say that prices have picked up due to a number of reasons. Export enquiries, especially from Chinese exporters, have picked up over the last few weeks. This is a primary reason for the jump in prices. Exports of guar seed and guar gum were pegged at 1,45,000 tonne last year, say analysts.

Being a kharif crop supplies of guar seed typically show signs of slackening towards the end of March. Analysts highlight that since at this time of the year there is uncertainty of rainfall in Rajasthan, the main producing state, leads to a lot of speculation in the commodity. Thus prices how signs of picking up, until the monsoon pattern in the country becomes clear.

"Uncertainty over this years monsoon appears to be the primary driver for this pick in prices," said Milind Vora of Maverick Commodities.

Domestic consumption of guar was pegged at 40,000 tonne last year, say analysts.

Guar gum has wide applications in diverse industries such as textiles, paper production and the construction industry.