The market had seen a downward trend from its peak, until the month of March, at which point the prices for standard grade Guar were circa $1500.00 per ton and advanced to $2300.00 per ton in April. From the beginning of March the price for Guar Gum has continued to advance.
There is no shortage of Guar seeds in the market at the moment. The majority of the reports that we have received from the manufacturers, confirms a lot of excess capacity within the powder manufacturing plants.
The most important factor is that the demand from the oil drilling/ shale gas industry has significantly diminished; due to the oil prices plummeting to a 6 year low of circa $42.85 per barrel which is appox $68.09 as we send this report out. This resulted in downward pressure on the Guar seed price, however when prices reduce to levels between $1500-$1800 per ton, we experiance increased demand from the food industry.
The monsoon reports from the Indian meterological department, has resulted in an increase in speculator activity. The c
urrent situation provides speculators with an opportunity to make a margin on the increased volatility and lack of clarity that is inherent with attempting to forecast the weather and Guar demand. However we expect the prices to be pegged more accurately when the meterological department releases the second report after the 20th of May, as this has a history of being more accurate.
If you need material and would like to eliminate being affected by the visisitudes of the market, the best method to hedge your self would be to book 50% of your requirement in the coming days and cover 50% after the 20th May. This simply will result in the price averaging out and eliminating some of the risk associated with purchasing this volitile commodity.