Mr. Ritesh Kumar Sahu (Fundamental Analyst- Agri Commodities, Angel Commodities Broking):
"Guar complex futures are trading on negative note in last two months after touching its high in three years in January. During last two months (Feb and Mar), Guar seed futures plunge by more than 12.4% from its higher levels in 2018 while guar gum slipped close to 15%.
Earlier in the season, when the guar seed harvesting started in October last year, the prices of guar seed were Rs. 3,500 per quintal which surged more than 35% to Rs, 4,730 levels in January 2018. The prices have jumped on expectation of lower production due to less acreage in Rajasthan, decline in arrivals and improved export demand for guar gum.
However, guar futures did not sustain its positive momentum during the month of February and March 2018 mainly due to technical corrections after continuous increase in prices for 3 prior successive months. This correction was due to increase in production estimates in Rajasthan and fear of decline in exports demand at higher prices.
In second advance estimates by the Rajasthan government guar seed production was forecast higher by 10% on year at 15.4 lakh tonnes in 2017-18 (Jul-Jun) on anticipation of higher crop yield in major districts of Rajasthan.
Guar gum exports from India during FY 2017/18 for period Apr-Feb surged 24.3% on year to 4.50 lakh tonnes compared to 3.62 lakh tonnes last year as per the data released by the Agricultural and Processed Food Products Export Development Authority (APEDA). India's guar gum exports increase by 0.7% on year in February to 44,081 tonnes, however, the exports have increase on month by more than 9.7% despite increase in guar gum export prices.
In February, the average export price per quintal of guar gum increased by more than 1100 rupees to Rs. 9,596 in February from Rs. 8,438 in January which is highest in two year. The major guar gum export destinations from the country are USA, Norway and China.
As per the data compiled by Department of Commerce, in the first 10 months (Apr-Jan) in FY 2107/18, US imported more than 1,77,700 tonnes of guar gum from India compared to 1,31133 tonnes last year. The guar gum's demand has increased in North America as shale gas and oil exploration has improved as it is used as a fracking agent in shale gas extraction.
Overall, guar gum exports have improved this season despite average monthly export prices is higher by more than 900 rupees per quintal at Rs. 8,200 in 2017/18 compared to Rs. 7,300 last year.
Going forward, the Guar Seed May Delivery contract on NCDEX is expected to improve in coming week and trade towards 4,310 (CMP: 4,120 per quintal) supported by increase in guar gum exports in the months of April and May as the US is expected to increase its oil and shale gas drilling operations due to the surge in crude oil prices. Moreover, it get support from dip in arrivals in the physical market and strong physical demand from the millers and stockists. However, prices may correct further from the current levels if India Meteorological Department (IMD) predicts normal monsoon for 2018."