Posts Tagged ‘Shellac and Forest Products Export Promotion Council’

GUAR…… “U” TURN AHEAD

Guar gum enjoys prominent position in the exports of minor forest products. India exports guar gum in various forms to all parts of the globe. More than 80 per cent of exports of minor forest products are accounted for by guar gum.

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The government has appointed Shellac and Forest Products Export Promotion Council (SHEFEXIL) as the canalising agency for export of guar gum to Europe. “Guar gum exports to European Union, originating in or consigned from India and intended for animal or human consumption have been allowed subject to endorsement by SHEFEXIL.

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Around 90% of the total Guar Gum production is exported to countries like China,US, Germany and France.

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Sowing and Harvesting Season….

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The crop is sown from June and extends up to July. It is harvested from October and the peak arrival time continues till the end of December.

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Guar complex mostly follows the seasonal pattern in its movement, but quite volatile during March- September. As given in the above chart, guar seed prices tend to remain low during January, June and September months. The price movement starts its bull run from February, the time of lean arrivals & reaches its peak in the month of July. Later on, during August the reports of sowing come into scenario which affects the prices. The arrival pattern during October & December further brings the prices down.

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The early south- west monsoon forecasts and progress of monsoon from June to September influence the price movement. Later on, arrival pattern and demand from stockiest affect the prices.

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The Road Ahead: Considering the supply side in the current crop season i.e. October 2009-September 2010, production is estimated to be lower at around 3-3.5 million bags compared with 8.5-9 million bags in 2008-09. Carryover stocks of last year for Guar seed stands at around 3-3.5 million bags. Thus, total supplies for 2009-10 stands at around 6 million bags, which is far below the total consumption of 7-7.5 million bags. Guar gum stock with the stockiest currently stands at around 150,000 tonnes. Guar futures have already discounted by almost 15-18% since the beginning of the year due to slowed down off-takes by millers. They were not buying Guar seed at high prices as they have huge stocks of Gum & also due to huge disparity in the price of seed and gum.

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However, after the futures finishing their correction phase, the current scenario signifies that the stockiest have started stocking Guar seed at the current low prices on expectations that the prices would rise further due to a drop in output. However, further price rally would depend on the overseas demand for Guar gum which is expected to pick up which may lead prices to breach the level of 5100 in medium term.

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Stay Tuned for More Updates :)