Good monsoon forecast should keep Guar prices stable

In our last Guar Market Update on 18-Feb-16 (as given in the blog entry below) we had made a point that all the bad news seems to be priced in and that Guar splits prices should remain confined in a narrow band between $800/MT to $950/MT. In fact Guar prices remained even more stable and were confined to a tight band between $800/MT to $850/MT.

See chart below for more details

In the last few days, Guar splits had started inching upwards in sync with the rise in crude oil prices.

However the first initial forecast for the Indian Southwest Monsoon 2016 from Skymet Weather (a private organisation), which came out yesterday, and which stated that “Monsoon 2016 is likely to remain above than the normal at 105% (with an error margin of +/-4%) of the long period average (LPA) of 887 mm for the four-month period from June to September”, has resulted in Guar splits prices giving up its gains from the last couple of days. To view the complete Skymet Weather’s Monsoon Foreshadow report please click here.

Additionally the 1st Stage LRF (long range forecast) of the Indian Southwest Monsoon, from the Indian Meteorological Department, has also just been released in the last half an hour and it states “Quantitatively, the monsoon seasonal rainfall is likely to be 106% of the Long Period Average (LPA) with a model error of ± 5%. The LPA of the seasonal rainfall over the country as a whole for the period 1951-2000 is 89 cm”. To view the complete forecast please click here.

Both these positive forecasts should ensure that Guar splits prices remain stable over the near term. However it will be very important to keep a close watch on the onset and progress of the monsoon over the next 2 to 3 months …. we will keep you posted!