The futures contracts of the guar complex witnessed smart recovery last week. Guar seed closed at ₹3,391 per quintal, up 4 per cent for the week and the guar gum contract closed at ₹7,132 per quintal, up 4.2 per cent for the week. Physical market and export demand, coupled with firmness in crude oil prices, triggered the reversal last week. Additionally, limited supply ahead of GST implementation also supported the prices.

The coming weeks are likely to be crucial for the guar industry as the impact of GST on agri commodities could be a major area to watch. Five per cent GST is proposed for guar gum and meal. Supply has dropped in recent days whereas millers who were avoiding bulk buying earlier now have gone for fresh buying in view of emerging export enquiries for gum. Higher export outlook for gum backed by rising number of oil rigs in US amid boosting oil drilling activities may spur speculators to cover short positions at futures platform.

However, rapid monsoon progress in the north-west region and higher planting prospects for upcoming season may restrict the major gains. Developing favourable weather condition for further advancement of monsoon across Haryana and Rajasthan could pull down the prices soon. Hopes of better price realisation amid higher monsoon forecast may spur farmers to increase acreages under guar.

The writer is Head-Commodity Research, Karvy Comtrade

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