Guar prices seen up on supply shortage

NEWS DIGEST

Guar prices are seen higher in short to medium term driven by a supply crunch as production has fallen short of estimates, traders said.

"This is the peak arrival season for guar. However, till now arrival has been quite low," Ravi Kant Kanungo, a guar trader, said.

The arrival this season is estimated at 30,000-40,000 bags of 100 kg each per day compared with 60,000-70,000 bags that usually arrive everyday during the peak season.

If this trend continues, then within a few weeks guar prices are likely to rise Rs 500-1,000 per 100 kg, Kanungo said.

Guar mill delivery Jodhpur is at Rs 1,800-1,950 per 100 kg. Poor rainfall in some parts of Rajasthan, and floods in some other guar growing areas of the state have caused widespread damage to the crop.

Guar is mostly grown in northern and western Rajasthan.

Fertiliser subsidy seen rising 78 per cent

The government's fertiliser subsidy burden in the current financial year to March is likely to increase to Rs 32840 crore compared with the revised estimate of Rs 18474 crore last year.

"The actual requirement for 2006-07 (April-March) has increased to Rs 32840 crore (gross), which includes Rs 26926 crore for the current year and Rs 5913 crore as carry-over liability from 2005-06," the fertiliser department said in a background paper released today at the Economic Editors' Conference.

The department was allocated Rs 17252 crore in the budget and then provided Rs 1500 crore in the supplementary demand for grants.

It will now need another Rs 14000 crore to meet the requirement.

The increase in subsidy is likely to stem from higher demand for fertilisers in the current financial year.

India's kharif (Apr-Sep) urea sales are estimated at 11.3 million tonne, up 5.5 per cent on year, while DAP sales are pegged at 3.2 million tonne, up 27.3 per cent on year. Urea output during the period, however, was 9.76 million tonne, down 3.6 per cent on year.

The department said urea import on the government account has been already finalised to meet the heavy demand in the current financial year.

It said the government is working to increase India's total urea capacity by 5.86 million tonne to become self-sufficient.