Weekly: Spot Guarseed, Guargum Prices In Bearish Zone On Subdued Cues

MUMBAI (Commoditiescontrol) – Spot Guarseed/Guargum prices after registered over 8% and 3% of gain during the last couple of week, weighed by selling pressure this week (Feb 2-9) amid subdued demand, lower than expected exports and sharp fall in crude oil.

Guarseed fell this week by 4.14% at 4,503/100kg at the benchmark Jodhpur market of Rajasthan, while Guargum slipped 4.32% at 9,844.

The sharp fall in prices were attributed to slow demand for Guargum from international market led by strong selling on futures.

Oil Rigs Count Jumps To Nearly 3-Year High
U.S. energy companies added 26 oil rigs this week, boosting the count to 791, its highest since April 2015, even as crude pulled back from three-year highs with drillers expecting higher prices for their output in 2018 than last year.

Increasing numbers of oil rigs count is positive news for Guargum industry as its consumption will increase going forward.

Crude Oil Tumbles
Prices were also weighed by sharp fall in crude oil prices, which plunged sixth straight day on Friday by 3.2%, settling at $59.20, posting worst weekly decline in two years.

U.S. crude nearly falling below $58 a barrel, as rising production, a strong dollar and a broad financial asset sell-off combined to weigh down the market.

The drubbing started last Friday and gathered steam this week, putting U.S. West Texas Intermediate crude on pace for its worst weekly performance in two years.

U.S. crude plunged to a seven-week low at $58.07 a barrel, before paring losses to end Friday's session down $1.95, or 3.2 percent, at $59.20.

Brent crude dropped $1.66, or 2.6 percent, to $63.15, after hitting a nine-week low at $61.77 by 2:28 p.m. ET.

For the week, U.S. crude was down nearly 9.6 percent, while Brent has fallen about 8 percent.

December Export Data Hurts
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.

Guargum export during FY 2016-17 totalled at 419948.19 metric tonnes against 3,25,250.71 metric tonnes.

On derivatives, the benchmark March Guarseed contract settled 5.68% at Rs 4,497/100kg on the National Commodity & Derivatives Exchange Ltd (NCDEX). Guargum March futures fell 5.63% at 9,946.

Technical View
Guarseed: Exit long position as evening star candlestick pattern has been formed. Expect lower range of 4361-4039 can be tested with volatility. Resistance will be at 4545-4682. A rise and close above 4800 can resume the rally otherwise near term correction towards DRV-4220 is possible.

PRICE, VOLUME AND OPEN INTEREST STRATEGY

Guargum: Near term correction likely in Guargum. Prices may test lower range of 9633-8876. Upside only on rise and close above 10,625.

PRICE, VOLUME AND OPEN INTEREST STRATEGY

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