The market has remained stable with only slight price fluctuations amidst the holiday season and new crop arrivals. Many changes are anticipated to the Guar market in 2017, due to acreage reductions, increasing oil prices and an overall increase in demand.
The new crops have arrived in the market, however, the prices for Guar Gum have remained range bound. Usually the prices of Guar will reduce as the new crops are brought to market, however, the current indicators and demand have curtailed this.
Guar seeds are predominantly in the hands of the stockists who are steadily releasing supply to manufacturers.
Although the Indian Department of Agriculture has predicted Guar acreage to reduce by 30%, Guar powder manufacturers have recently reported an increase in production from 30- 50% of full capacity. Supply is steadily reducing, however, the trend over the last 3 years is of increasing demand.
Further demand is anticipated as the holiday period is now officially over. The increase in the manufacturer’s production by 20% during the holiday period, is a clear indicator of the current trend in the market.
There has also been a steady increase in Guar exports over 2016 which is anticipated to continue into 2017.
The oil prices have now crept up passed the $50.00 mark, providing further incentive for shale gas producers to escalate extraction. Operating cost reductions have also boosted profitability and viability at lower oil price levels.
We have experienced an increase in inquiries from the oil drilling industry, which could be associated with oil price increases, OPEC’S decision in 2016 and Chinas current appetite for Liquified Natural Gas (LNG). The demand from the food and technical industries have remained firm, as Guar Gum remains one of the cheapest and best hydrocolloids in the market.
Manufacturers have informed us of an increase in forward bookings as a result of growing consensus of higher prices in the near future. Based on the information which is currently available, this prediction seems plausible.