Chennai, Nov. 4

Guarseed and gum prices are likely to rule firm until the middle of this month and further movement of the prices in these commodities will depend on the demand-supply situation.

Currently, guarseed prices are quoted at Rs 2,576 a quintal in the spot market, while November contracts on NCDEX are ruling at Rs 2,558.

Guargum prices are quoting at Rs 5,454 a quintal in the spot market and Rs 5,390 for November contracts on NCDEX.

"With crude oil prices rising to $80 a barrel and Indian guargum making inroads into the European market, there is a good demand for guar. Due to this, the market has been moving continuously," said Mr Jeevan Gandhi, President of Indian Guar Gum Growers Association.

Crop size

A month ago, guarseed was quoted at Rs 2,266 a quintal on the spot, while November contracts ruled at Rs 2,272. Guargum prices ruled at Rs 4,814 a quintal on the spot and Rs 4,845 in the futures market during the same time.

"The guar crop is now expected to be around 2.5 lakh tonnes against 10 lakh tonnes last year. Arrivals during the last two days have touched 30,000 bags (of 100 kg) daily and everything has been bought over," Mr Gandhi said.

With crude oil hovering around $80 a barrel, the industry is hopeful of renewed demand for guargum that is used in fracturing of oil and gas formation. "We expect good export demand from Europe and the US. Though there is no special demand from China, we expect some 50,000 tonnes to be shipped to that country," he said.

Soyameal demand

Another factor seen bullish for guar is the rise in soyameal.

"The demand for soyameal is good and prices are rising. Therefore, people are looking at alternatives such as guarmeal. There is scope for more demand and thereby, rise in guarseed prices," Mr Gandhi said.

Arrivals of a part of the crop in Rajasthan, where production is estimated to be nearly one lakh tonnes, are expected later this month.

Arrivals from Gujarat and Haryana have gathered pace and apart from the arrivals this week, the average arrival in the market has been below 20,000 bags this year.

"This is a clear indication of a lower crop," Mr Gandhi said.

Output hit

Rajasthan contributes nearly 70 per cent of the total crop and this year, prolonged dry weather has affected the production. The crop has been affected in Haryana too.

"The carryover stocks of over 1.5 lakh tonnes of guargum will help in containing the prices to an extent," he said.

Guar or cluster beans is a legume crop that grows best in semi-arid regions in the country. Guargum is used as a thickening agent and as an additive in food products such as instant soups, sauces, processed meat products, baked goods, milk and cheese products, yoghurt and ice-creams. It has industrial applications in paper and textile sectors, ore floatation, explosives manufacture besides oil and gas sector.

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