The increasing oil prices and high demand from the food industry are fueling the increasing price within the Guar market. Clean label and gluten-free ingredients continue to grow in popularity reflecting the Changing lifestyles and priorities of consumers.
In November-December 2017, manufacturers experienced a decrease in new arrivals of Guar seeds. This is being attributed to the estimated decrease in Guar acreage as was estimated by the Indian Department of Agriculture.
Total production of Guar this year is expected to be around 7,000,000-7,500,000 Bags (100 kg each), which is significantly lower than previous years.
Some operators have reported a decrease in carryover stocks due to the increase in demand compared to the same period last year. This is further supported by the fact that current prices are the highest since May 2015.
Rising export demand and concerns surrounding crop yield from the recent losses, due to excess rains in Rajasthan, are further supporting the price for Guar.
The demand for Guar may rise drastically in the near future due to USA’s proposal to sell oil drilling leases in almost every inch of the nations outer continental shelf.
There is optimism among the market participants on Guar Gum exports due to a recent jump in crude oil prices. Oil production is anticipated to cross 10 million barrels a day and U.S. refining runs increased, pushing capacity use to 95.7 percent, the highest in December dating to 1998.
Reports of the increasing popularity of Guar Gum substitutes such as Xanthan and Locust Bean Gum, is a factor, which may restrain the expansion of the global Guar market. However, at this moment Guar remains one of the cheapest and best Hydrocolloids on the market.
Marketmen said speculators were enlarging their bets on the back of strong physical cues due to robust export demand from the oil drilling and shale-gas industries, which led to the surge in prices.
Unfortunately, all indicators are pointing toward the prices at worst increasing and at best remaining stable.