With slump in overseas demand, guarseed exporters and millers are accumulating stocks of the grain commodity which has hit three years low this season. Trading sources and commodity analysts said that players are anticipating a recovery of demand.
Europe, America and China are the major export markets for the domestic guarseed. However, so far there have been considerably less export enquiries. Dynamics in the export market play a vital role in guarseed market as over 80 per cent of the domestic guar goes overseas.
However, indications suggest the export will be far less this year and domestic market will not be able to consume the entire production. This could result in further fall in prices. Navratan Daga, a Bikaner-based guarseed trader, said, "There is not much movement in the market. There is not much demand from the overseas market."
"Global economic slowdown has led to a drastic fall in exports of guar gum from India in 2008-09," said a report by Angel Commodities. It added that exporters and millers have started stocking the commodity.
Harvesting of guarseed is completed in December last year and around 65 per cent of the produce has arrived in the physical markets. Report suggests that the stockists are holding 35 per cent of the crop and the supplies are very less as stocks are not being released at such low levels.
According to Sriram Aiyar, research analyst at Agriwatch Commodities, "Another reason for accumulating stocks is the traders' anticipation of less production next season. They view that there could be drastic fall in production as farmers are diverting to other crop like cotton, chana and soyabean."
In Bikaner and Jodhpur, the spot prices of guarseed ruled on Wednesday at Rs 1600 and Rs 1630 a quintal respectively. The market estimates for the current season's production is around 7 million bags (each of a quintal), which is almost at par with the last year's crop.