The Hindu Business Line : Lower guar seed output seen this year

Chennai, Aug. 28 Guar seed production this year is likely to be lower at around 70 lakh bags of 100 kg. The crop could gain about 5 lakh bags if the growing regions in Rajasthan receive adequate rainfall this week but still supply is expected to tight, according industry players.

“As of now, we expect the production around 70 lakh bags. The rain-fed regions that grow guar need urgent rains,” said Mr Jeewan Gandhi, President, Indian Guar Gum Growers Association. “Though we had rains during the weekend, it was insufficient,” he said.

Guar or cluster beans is a legume crop that grows best in the semi-arid regions in the country. In India, guar is grown primarily in Rajasthan. It is also grown in Haryana, Punjab, Gujarat and Madhya Pradesh. While guar is seen as a vegetable in the South, in the North it is primarily seen as a raw material to produce guar 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. 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 of the total global supply.

Indian exports guar gum to Europe, the US, Australia and China. Interestingly, China buys raw guar gum from India and re-exports it as processed gum.

Standing crops

According to Angel Broking, the rainfall, at the most, could revive the standing crops and will not encourage fresh sowing. Rainfall, which is lower by nine per cent in Rajasthan this year, has affected guar sowing.

According to Mr Avinash Rathi, an exporter, guar crop and quality could be hit because of inadequate rains this year. “As of now, the quality of the standing crop does not hold much promise,” he said.

“The yield in Haryana this year is expected to be one tonne per hectare. Including Punjab, we could get about 30 lakh bags from that region,” he said.

On the other hand, coverage of guar in Gujarat has been poor and, therefore, the crop could be less in that State. “There could be a shortfall of about four lakh bags in Gujarat, where the output could be 7-8 lakh bags. Plus, we expect to get 1-2 lakh bags in Madhya Pradesh,” Mr Gandhi said.

In Rajasthan, the crop could be 15 lakh bags each in rain-fed and semi-arid zones, he said.

Crop quality

On quality of crop, Mr Gandhi said ones sown in June were small. “They will yield only 26-27 per cent gum, whereas a normal quality should yield 29 per cent gum,” he said.

Mr Gandhi said at least two lakh tonnes of guar gum were expected to be exported this year and for this 75 lakh bags of guar seed was required. “Then domestic demand is expected to be 4-5 lakh bags, taking the total requirement to about 80 lakh bags. Then, carryover stocks are expected to be around 20 lakh bags annually.

“The problem is that these carryover stocks are usually in the hands of big farmers and traders. Therefore, demand-supply will be tight and as a result, prices may go up,” Mr Gandhi said. “Already, the spot prices for gum have gained by Re 1 a kg to Rs 48,” he said.

Mr Rathi said the jump in prices was likely as the crop in Pakistan was also reported to be poor.

However, Angel Broking said prices of guar were expected to be bearish in the short-term on reports of rains in Rajasthan. “In the long-term, it looks bullish on fundamentals,” it said.

On Tuesday, guarseed September contracts slid to Rs 1,741 a quintal from Rs 1,753 on Monday, while October contracts dropped to Rs 1,775 from Rs 1,791. Guar gum futures also declined in tandem.