Guarseed, gum prices to rise 25% on thin stocks

Guarseed and gum prices are expected to surge 25 per cent to Rs 23 per kg from Rs 18 per kg and Rs 60 per kg from Rs 45 per kg, respectively, in March owing to rising demand and depleting stocks.

"Guarseed season starts in October and ends in April. Hence, as April comes closer, the arrivals become thinner," said Prakash Chopra of Chopra Guargum Industries, a Jodhpur-based guargum producer and trader. Seed sowing season starts in July-August and arrivals start soon after Diwali.

For the past month, guarseed and gum prices were ruling between Rs 1,800 per quintal and Rs 4550 per quintal, respectively, albeit few marginal variations.

Earlier, China procured the commodity from Pakistan, but owing to Pakistan's failure in meeting the rising demand, China started importing guarseed and gum from India.

Market sources said that about 8,000 tonne of guar has been exported to China last week at a price of Rs 4,500 per tonne. Local exporters have also purchased around 1,300 tonne of guargum from from Rajasthan.

"Price movement in the physical market does not impact the futures market as prices do not vary only on the demand and supply scenario but also on other aspects like, 'Byaz Badla', Chopra said.

"When 'Byaz Badla' comes into play, the demand rises and spot price increases. But, prices do not move in tandem with rising export demand as they are met through a handful of traders," Chopra added.

India is the leading exporter of guarseed and gum to the world. The country's exports to China and other markets totalled 145,000 tonne last year.

But, demand is expected to touch 160,000 tonne this year owing to increasing demand from China. Domestic consumption is also expected to increase substantially to 55,000 tonne this year from 40,000 tonne last year.

Increasing production and overseas demand invited lots of investment in processing units in the recent past which brought the total number of units to 130 from 80, few years ago.

Guarseed and guargum futures settled lower on the National Commodities and Derivative Exchange (NCDEX) on Tuesday.

Guarseed futures closed lower in the range of Rs 9-13 per quintal across the board. Guargum futures traded lower in the range of Rs 23-28 per quintal for different contracts on NCDEX.

The February guarseed contract ended at Rs 1,719 per quintal, down Rs 13. Guarseed and gum on Multi Commodity Exchange of India Ltd (MCX) closed at Rs 1,722 and Rs 4,530 per quintal, respectively, on Tuesday.