The Hindu Business Line : Guar gum prices crash

GUAR gum spot and futures prices at the National Commodity and Derivatives Exchange (NCDEX) have crashed by over 20 per cent in just nine days on reports of fresh round of rainfall in the guar-seed producing areas of western Rajasthan.

Trading in guar gum futures contracts commenced on July 26. The September 2004 contract of guar gum (refined guar splits) opened at Rs 5,018 per 10 kg on speculative buying support. But contracts fell sharply to touch a low of Rs 3,818 per 100 kg on reports of fresh round of rains in Rajasthan, a major producer of guar seed, a floor operator said.

However, prices recovered marginally to Rs 4,074 per 100 kg on Thursday on buying support at lower level.

Spot price of guar gum at Jodhpur centre also fell sharply to Rs 3,847.25 per 100 kg on Friday from Rs 4,759.45 per 100 kg on July 26, down Rs 912.20 or 20 per cent in just 11 trading sessions on some quick offerings by a few stockists.

"Last one month, there were no rains in the entire western region of Rajasthan as a result major stockists were reluctant to sell their products. Sowing of guar seed was completed in the western Rajasthan and rains were required in the last week of July. With the adequate rains recorded in last one week, the market sentiment has now turned bearish," a leading broker said.

"New arrivals of seeds will start from November onwards. There are sufficient stocks with stockists and traders. There is no shortage," he said.

Reports that stocks of over 50,000 tonnes are lying at the Jodhpur warehouses.

" We are right now closely watching the market. We have some export enquiries. It is too early to predict the crop size. Also, speculative element is major worry of exporters and processors," a leading exporter told Business Line.

Exports of guar products from the country are around 1.40 lakh tonnes per annum. Current export price of guar gum is around $1,000 per tonne on f.o.b basis. Guar gum is an emulsifier, thickener, and stabiliser and is used in food, cosmetics and pharmaceuticals items.