JAIPUR (Commoditiescontrol) - Guarseed and Guargum traded mostly flat during last week in sluggish business amid holidays for Independence Day (August 15) and Rakshabandhan (August 18).
Low Cultivation Area
Guar sowing has almost stopped as per primary information received from market sources and acreage as a whole is unlikely to cross figure of 30 lakh hectares.
Guarseed as on August 15 has been cultivated on 25.78 lakh hectares in Rajasthan, while acreage stood at 1.19 lakh hectares in Gujarat on August 12. Area in Haryana reached at 2.5 lakh hectares. Thus total cultivation area is well 30 lakh hectares. This the lowest area since last seven years.
Production Likely Down
In the first batch of sowing Guar cultivation area was very low it was far below than other kharif crop. In the first batch Guar has been sown in only 10 lakh hectares. In best condition Gaur average yield likely to be around 600 kilogram per hectare thus the output from the first batch is expected at around 60 lakh bags from first batch due to good rainfall and sufficient moisture in flower and seed formation.
In second batch Gaur cultivation area started to improve and it reached up to 20 lakh hectares and yield from this batch is projected to be around 200 kilo gram per hectare and it could add 20 lakh bags in production. In the last batch rainfall covered the western part of Rajasthan and sowing area was added from Barmer, Jaisalmer and Jodhpur and total area in the country now reached nearly 30 lakh hectares. In the last batch average productivity is expected at 50 kilo gram per hectare. There will production of 5 lakh bags from last batch of sowing. As per primary estimate Guar production will be 85 lakh bags in good condition. In most favourable condition it may touch 1 crore bags.
Strong Crude Oil
Crude is life line of Gaur gum industry and it get a strong physiological support from crude prices. New York-traded oil futures rallied $4.03, or 9.06% during the week, the largest weekly gain in five months. On the ICE Futures Exchange in London, Brent oil for October delivery touched an intraday peak of $51.22 a barrel, the most since June 22, before giving back some gains to settle at $50.88 by close of trade, down a penny on the day.
Brent oil above $50/barrel is very strong fundamental support form guar seed and Guargum prices. OPEC is planning to cut the oil production to maintain the inventories in the line of demand.
Speculators Active
Speculators are active in industry in expectation of better return with improving crude prices. Speculators are trying dominate the market, which is against the price improvement of Guarseed and Guargum. Since there is uncertainty about sowing and production numbers they are trying to make most of it. However once the market condition clears they will turn sideline.
Current Situation
At ground level all the stake holders related to Guar which includes farmer, traders, stockist, processors, exporter, end users and investors have got the primary inputs related to low production of guar and currently Guar is emerging as strongest commodity in comparison to others from gaur growing belt. Bajra don’t have any major industrial application and it is not a long term investment friendly commodity. Another major segment is pulses. Pulses are already under heavy pressure of bumper production due to increased cultivation area. Third segment is oil seed. In guar growing belts, oilseed acreage during Rabi season especially mustard is expected to rise.
Crop Situation
In Guar growing belt flowering has started in early sown crop. Flowering has started in lower branches with high temperature and upper branches are growing with increasing moisture. Right now no major disease and pest attack has been noticed in early crop and it is standing healthy in green condition. Late crop is growing and it is also standing healthy. Moisture in climate in guar growing belt is not excess.
In early stage there was attack of red hairy caterpillar in Haryana followed by Hanumangarh and Churu districts of Rajasthan, but now these insect has completed their caterpillar lifecycle.
Crop sown in very late stage specially in Jaisalmer and Barmer is facing the problem of moisture stress because there is no second lot of rainfall. After the germination there must be rainfall within 10-15 days. If this crop will not get this rainfall timely then there will loss of crop in very big area. But production point of view it is not an important belt. People go for guar cultivation due to lowest opportunity cost of land in this belt.
In short term Guar may cross the level of 4,000/100Kg up to first week of September. But in long term investor may consider 5,000/100 kg level up to November. At this stage guar need to cross a strong support of 4,000/100 Kg level and sustain for one week. Investor must keep their existing position and they can consider to enter for long term investment for 6-12 months.
(By Commoditiescontrol Bureau; +91-22-40015533)
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