The Hindu Business Line : Export orders turn guar counter bullish

Scaling higher
Prices of guar gum in the Jodhpur spot markets have increased by Rs 272 a quintal to Rs 2,005 in one month.
During the period, prices for guarseed have jumped by Rs 608 a quintal to Rs 4,916.

Suresh P. Iyengar

Mumbai, March 6 The guar counter on NCDEX is buzzing with activity as the season comes close to an end. Good export demand is supporting the bull run in the counter. India accounts for nearly 80 per cent of global guar gum supply.

Over 10% jump

Prices of guar gum in the Jodhpur spot markets have increased by Rs 272 a quintal to Rs 2,005 in one month, while guarseed jumped by Rs 608 a quintal to Rs 4,916, according to NCDEX data. Arrivals have declined from 50,000 bags to below 10,000 bags.

Apart from export demand for guar gum, fresh orders for other by-products such as ‘churi’ and ‘korma’ are driving up the prices.

According to trade sources, more than one lakh tonnes of guar gum export orders have been reported in the past few months, apart from 60,000 tonnes of other guarseed products.

Guarseed prices in 2007 were weak at about Rs 1,600-Rs 1,900 a quintal, as exports remained subdued due to the appreciating rupee and issues over contamination.

In the last ten days, guarseed for March delivery on NCDEX has rallied by Rs 166 to Rs 2,022, while guar gum has risen by Rs 345 to Rs 4,784.

Huge inventory

According to analysts, the rise would have been much higher if not for the huge inventory of 78,300 tonnes, including gum, reported in NCDEX-accredited warehouses in the first week of March.

Production of guarseed was estimated at 75-80 lakh tonnes in kharif 2007, compared with 70-75 lakh bags in the previous year. However, output has marginally come down against the early estimates of 85-90 lakh bags.

“We are expecting guar prices to remain on the higher side and recommend going long on correction. Go long on guarseed, with a target of Rs 2,150-Rs 2,200 per quintal in the medium to short term,” said Mr Harish Galipalli, Head of research, Karvy Commodities.

Dioxin problem

Guar gum exports came to a standstill in August last after a shipment was found having excess level of dioxin. Though only one part of some five consignments sent to Europe was found with higher dioxin levels, the EU authorities totally stopped imports of guar gum from India.

Later, EU buyers began to accept guar gum shipments but only after they were certified by accredited labs that they did not contain excess levels of chemical residue.

Guar gum is derived from guarseed (cluster beans), a legume crop that grows well in semi-arid regions of the Indian subcontinent. India is the leading exporter of guar gum making up nearly 80-85 per cent of the global production.

Use of gum

Guar gum is used as a thickening agent and additives in foods products such as instant soups, sauces, processed meat products, baked goods, milk and cheese products, yoghurt and ice-creams.

Guar gum is used in industrial applications such as paper and textile sectors, ore flotation, explosives manufacture and fracturing of oil and gas formations.

More Stories on : Exports & Imports | Commodity Markets

Article E-Mail :: Comment :: Syndication :: Printer Friendly Page