Weekly: Guarseed/Guargum Continues Bearish Tone On Poor Exports

MUMBAI (Commoditiescontrol) - Spot Guarseed and Guargum declined more than 1.5% this week due to lackluster business activity in the spot market against decent supply and bearish cues from futures market. Guarseed prices at the benchmark Jodhpur market dropped 1.56% at Rs 4,371/100kg, while Guargum edged down 1.55% Rs 9,367.

Guarseed daily average arrivals during the week rose to 16,000 bags (100kg each) compared with 14,400 bags on previous session. The rise in arrivals were attributed to increased selling by farmers and stockists due to falling prices.



SLOW EXPORT DEMAND WEIGH PRICES
Guarseed and Guargum prices in the spot market were mainly weighed by poor demand for Guargum in the international market, which was reflected in December export data. The main five consumers of Indian Guargum is United States (50.86%), Norway (7.15%), China (6.69%), Russia (5.98%) and Germany (5.21%).

India's Guargum export during the month of December 2017 rose at slower pace of 3.06% month-on-month at 43,881 metric tonnes compared with 42,574 metric tonnes during the same period a year ago, according to Agricultural & Processed Food Products Export Development Authority (APEDA).

Cumulative Guargum export during April-December 2017 increased 35.85% at 365,451 metric tonnes versus 269,001 metric tonnes last year.

CRUDE OIL-U.S RIG COUNT
Oil futures held on to gains Friday after data showed producers added one additional rig this week, leaving crude to notch its second consecutive weekly gain as it continues to claw back ground lost in a selloff earlier this month.

West Texas Intermediate crude oil for April delivery CLJ8, +1.27% on the New York Mercantile Exchange—the U.S. benchmark—rose 78 cents, or 1.2%, to settle at $63.55 a barrel. For the week, it rose 3.3%. That leaves the contract around 1.8% lower month-to-date, however.

The global benchmark—Brent crude, +1.07% —rose 92 cents, or 1.4%, to close at $67.31 a barrel, for a weekly gain of 3.8%.

Oil maintained gains after oil-field services firm Baker Hughes said the number of U.S. oil rigs rose by 1 to 799 this week. Concerns about ramping U.S. production were offset by data on Thursday that showed an unexpected drop in crude inventories last week.

The Energy Information Administration said crude-oil stocks fell by 1.616 million barrels in the week ended Feb. 16. Analysts surveyed by The Wall Street Journal had forecast a 1.9-million-barrel rise.

FUTURES MARKET
Guarseed and Guargum futures first continous month dropped 3.41% and 2.54% at Rs 4,298/100kg and Rs 9,295 during the week on the National Commodity & Derivatives Exchange Ltd (NCDEX) as specualtors enlarged bearish bets due to weak cues from the spot market.

CONCLUSION
Guarseed and Guargum prices were under tremendous pressure during the last few weeks amid concern about export demand, which was said to be lackluster at the higher level, but now prices have turned attractive after recent sell off and good deal expected at these levels. Any sharp fall from present level unlikely as export demand is likely to revive at these level with rising U.S rig count. However crude oil prices are also crucial and need to keep a close eye on that. Overall Guarseed and Guargum prices is expected to record some good recovery next week on optimism about revival in export demand.

(By Commoditiescontrol Bureau; +91-22-40015533)