The Indian Southwest Monsoon has been progressing well this year.
Due to the significant decline in prices for Guar seeds/splits, and also due to the significant decline in Guar Gum export from India, the total area that has been brought under Guar cultivation this year has also declined significantly and which be seen below:
|Rajasthan – Area covered in Hectares (as on 18-Aug-16)|
|5 year avg. area for year ending 2014||Area sown by 20-Aug-15||Area sown till date||% as compared to same period of 2015||% as compared to the 5 year avg. area|
|Gujarat – Area covered in Hectares (as on 22-Aug-16)|
|3 year avg. area||Area sown by 20-Aug-15||Area sown till date||% as compared to 2015||% as compared to the 3 year avg. area|
Haryana is also an important state for Guar cultivation but the latest figures are not available from the state government. However based on market sources, the area brought under Guar cultivation in Haryana this year is 50% as that compared to last year.
However even after this significant decline in Guar cultivation, the total Guar seed output expected this year, plus the carry-over from the 2015 crop, should be more than sufficient to meet demand. All this info is already known to all the market players and we believe the same has already been factored into the current prices.
Moving forward, unless there is a sharp drop in crude oil price and/or a sharp drop in Guar Gum exports, we do not expect Guar prices to decline significantly in the near term.
- If the crude oil price increases significantly from the current levels or
- If Rajasthan, which is by far the most important Guar growing state, does not get a second round of rains in about 3 weeks
then it is likely that Guar prices will also start moving upwards