Guar gum, a processed commodity made from guar seeds, which was the top agri commodity in the exports basket in 2012-13, with $3.9 billion, lost its lustre later. Now, however, there are some initial signs it is regaining part of the lost ground. Its price on the NCDEX has shot up nearly 28 per cent since February, though it is still at number 10 in the agri export basket. Export volumes have registered growth during first three quarters of the current financial year and the once top contributor in trading volumes on the NCDEX, with prices at nearly Rs 1 lakh a tonne, is again contributing a sizable share.
However it has to travel a long road in order to regain lost glory. For the time being, the revival of shale oil wells in US has given rise to some demand for guar gum where it is used for smoothening drilling activities. After crude oil trading above $50 a barrel in the US consistently for several months, a number of shale oil fields are resuming or increasing production as it turns viable.
Anuj Gupta, Head-Technical Research-Commodities and Currencies, Angel Commodities Broking Pvt Ltd said, "In Feb 2017, prices started to recover sharply on good export demand for guar gum as the oil rig count in US went up after President Donald Trump emphasised on boosting the country's energy sector".According to data released by the Agricultural and Processed Food Products Export Development Authority (Apeda), exports of the commodity were up in quantity terms though they were still lower in value terms than in the same period a year ago. The pick-up in exports was largely seen during the past few months.
Guar is a kharif crop and depends heavily on the monsoon rains for its moisture requirement as it is grown in arid and semi-arid regions of Rajasthan, Haryana and Gujarat. Ajay Kedia, director Kedia Commodities said, "Guar seed sowing may be impacted if the feared El-Nino strikes. In any case farmers have been staying away from sowing guar because the comparable returns from the commodity are not so good."
Gupta said, "As per the latest update, guar gum exports in December were the highest in the past 23 months at 42,585 tonnes, up by around 34.6 per cent than in November and 20 per cent more than in December 2015".
Seed production has already started moderating. As per the second estimate of the Department of Agriculture, Rajasthan, the state government reduced guar seed production to 1.425 million tonnes, which is 36 per cent lower than 2.223 million tonnes in 2015-16. Even volumes have increased from Rs 103 crore to Rs 509 crore during the period.
