The Hindu Business Line : Guar gum exports may drop on economic slowdown

The numbers
Guar gum exports could be lower than the 2.15 lakh tonnes exported last year.
Shipments to the US may come down to 10,000 tonnes from 15,000 tonnes as growth in food consumption could be affected.

M.R. Subramani

Chennai, Sept. 30 Guar gum exports from the country could be lower than last year as the US and European Union witness a slowdown in their economy, while China may also cut purchase.

Food offtake

“This year, guar gum exports could be lower than the 2.15 lakh tonnes we exported last year. Our shipments to the US may come down to 10,000 tonnes from 15,000 tonnes as growth in food consumption could be affected,” said Mr Jeevan Gandhi, President of the Guar Gum Manufacturers’ Association.

European Union imports of Indian guar gum could be also hit due to lower offtake, while China, which uses Indian guar gum for its export products, could cut purchase in view of the general slowdown in the global economy.

Guar gum is produced from guar splits, which in turn is derived from guarseeds. Guar or cluster beans is a legume crop that grows best in the semi-arid regions in the country. Guar is grown primarily in Rajasthan. It is also grown in Haryana, Punjab, Gujarat, Uttar Pradesh and Madhya Pradesh.

Thickening agent

Guar gum is used as a thickening agent and additives in food products such as instant soups, sauces, processed meat products, baked goods, milk and cheese products, yoghurt and ice-creams. It is also used in industrial applications such as paper and textile sectors, ore flotation, explosives manufacture and fracturing of oil and gas formations. India is the major producer of guar seed and gum, making up 80-85 per cent of the total global supply.

India exports guar gum to Europe, the US, Australia and China, while Pakistan is one of the main competitors for India in this. At least, over 100 countries import guar products.

Trade tensions

According to trade sources, China’s buying of guar gum could be lower in view of tensions over trade relations.

“Leaving aside trade relations, we already are at a disadvantage compared with Pakistan in selling guar gum to China. It levies 12 per cent import duty on guar gum, whereas Pakistan’s products are imported duty-free,” they said.

Meanwhile, guarseed production could be around the initial estimates of 1.10 crore bags (of 100 kg each), according to Mr Gandhi.

“Arrivals have begun in Hanumangarh markets in Rajasthan also. On Monday, arrivals in Ganganagar and Hanumangarh have been estimated at 15,000 bags by 2.30 pm. By the weekend, the daily arrivals in these two markets can easily be 25,000 bags,” he said.

Field surveys and manual estimates made by guar gum manufacturers show that production in Haryana could be 35 lakh bags, while another five lakh bags could come from Punjab. In Hanumangarh and Ganganagar in Rajasthan, the production could be 45 lakh bags. It could be nearly three lakh bags in Gujarat and another two lakh bags could come in from Madhya Pradesh. The rest could be made up from other parts of the country, including rest of Rajasthan such as Jalore and Bikaner, and Uttar Pradesh.

Counting out UP

“We are counting out Uttar Pradesh as of now since almost all crops have been affected by floods there,” Mr Gandhi said. “The current weather is also good for the crop,” he added.

In view of the better crop prospects, guarseed November contracts in the futures market hit the lower circuit on Monday at Rs 1,651 a quintal before recovering to Rs 1,669 on Tuesday from weekend close of Rs 1,685. “Prices for November could fall to around Rs 1,600 a quintal,” Mr Gandhi said.

On the other hand, spot prices have also declined to Rs 1,652 a quintal. “Only gum manufacturers are buying in the spot market now. Speculators and others are not buying. The mood among them is at the lowest ebb since commodities prices are falling,” he added.

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