Weekly: Guarseed Trend Depends Heavily On Weather Conditions Next Week

MUMBAI (Commoditiescontrol) - Guarseed and Guargum rose over 2 percent during the week ended Friday at the benchmark Jodhpur market due to increased buying amid concern about crop due to scanty rainfall in producing regions.

Guarseed gained by 2.35% at Rs 3,864/100kg at the Jodhpur market, whereas Guargum rose by Rs 2.23% at Rs 7927.45.

Buyers are positive in Guarseed after poor rainfall in last fortnight in main producing belts of Rajasthan, which has raised concern about the crop as it is now at crucial growth period.

Guarseed sowing in Rajasthan as on August 15 stood higher at 28.26 lakh hectares against 27.10 lakh hectares a year ago, whereas acreage in Gujarat as on August 15 reached at 1.81 lakh hectares versus 1.19 lakh hectares last year.

Guarseed crop in Rajasthan is now at crucial period and need rainfall for better otherwise, otherwise yield is expected to decline significantly. The next couple of week will be very important for Guarseed crop.

India Meteorological Department forecast isolated rainfall in Rajasthan state up to August 23.

Guargum export demand is said to be good due to rising crude oil production in U.S and positive rigs count.

The EIA (U.S. Energy Information Administration) estimates that US crude oil production rose by 79,000 bpd (barrels per day) or 0.83% to 9,502,000 bpd on August 4–11, 2017. Production rose by 905,000 bpd or 10.5% from the same period in 2016.

Production is at the highest level since July 2015. Crude oil (IXC) (IYE) prices fell on August 16, 2017. The EIA’s inventory report showed that US production rose last week.

The number of rigs exploring for oil and natural gas in the U.S. decreased by three this week to 946. A year ago, just 491 rigs were active. Houston oilfield services company Baker Hughes said Friday that 763 rigs sought oil and 182 explored for natural gas this week. One was listed as miscellaneous.

Guargum October futures ended the week a tad down at Rs 8,177 against previous week close of Rs 8,181 on the National Commodity & Derivatives Exchange Ltd (NCDEX). The contract during the week hovered between range of Rs 7,790 to 8,300.

Meanwhile October delivery Guarseed futures closed this week with gain of 0.69% at Rs 3,932/100kg. The contract moved between Rs 3,747 to Rs 3,975.



Open Interest (OI) & Volume Analysis
Volume in Guarseed (October) recorded decent rise during the week, whereas OI was tad up. Guarseed futures during the week closed positive and with rising volume and OI, we have come to conclusion that prices may extend gain next week as well. On other hand, OI in Guargum (Oct) was in negative trajectory this week as was observed in graph, but volume was tad up. Guargum futures ended the week tad down this week with volume was on the little higher side, but open interest edged lower. Guargum prices may find some resistance at the higher level as drop in OI indicates liquidation by market players as they are expecting some correction ahead due to various reasons.

Conclusion
Guarseed and Guargum trend next week will be depend on rainfall progress. Price may continue upsurge in case of poor rainfall, whereas good rainfall may weigh on prices. One should therefore keep a close eye on weather developments in Rajasthan, the largest Guarseed producer in the country. Technically market is bullish and uptrend is intact.

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