Guar prices may rise on supply constraints

Guarseed futures, which came under pressure last fortnight due to the European Union's report on pesticides in export shipments, may rise on supply constraints. Commodity analysts and marketmen maintained that the coming days could see a surge in prices.

The highly speculative grain commodity slipped below Rs 2,000 a quintal a week ago and is still trading below Rs 2,000.

"At present, spot and futures prices are almost at equal levels. In the coming days, supply will fall short and stokists will play an important role in deciding the price movement. The guarseed market will be firm in April," said Sanjay Periwal, a Bikaner-based trader.

The country saw an overall production of around 8.5 million quintals in 2007-08 against the earlier projection of 12 million quintals.

According to commodity analysts at Angel Commodities, guarseed is likely to remain firm and prices may touch Rs 2,200 a quintal level mainly on the back of comparatively higher exports demand. Out of the export target of 240,000 tonnes for 2007-08, the country already has shipped 140,000 tonnes since October 2007.

Arrivals in mandis of Rajasthan, the biggest producer of guarseed, has slowed down in the last few weeks as the new season is nearing. "On the exports front, there has been no impact due to the EU report. We expect that the rising crude oil prices might further boost guarseed market," said Periwal.

Guargum (finished product from guarseed) is used for maintenance and repairmen of crude oil wells. "If crude sustains at $100 a barrel in the days to come, West Asia could emerge as an export market for guargum," he said.

According to commodity analysts, the Rs 1,920 a quintal level offers support to the near-month contract, whereas it will face resistance at the Rs 1,952 level.

Marketmen in Rajasthan are bullish on the guarseed market. According to them, the May and June futures could touch Rs 2,300 and Rs 2,400 a quintal mark respectively.

On the National Commodity and Derivatives Exchange, the April contract for guarseed closed on Thursday at Rs 1,938 a quintal against the previous close of Rs 1,934 a quintal.