The price for Guar Gum continues to push higher. Reduced supply, decrease in production, delayed monsoons and slight improvements in demand; have resulted in the current price levels.
Prices of Guar Gum have increased by 15-20% over the last few weeks, a number of factors have contributed to this current spike in prices. Some estimate that the land dedicated to Guar cultivation has reduced by 50%. A delay in the monsoon may temporarily contribute to the current price increase, however, if the estimates are correct, the output will be considerably lower compared to the previous year. A reduction in supply and minimal change in demand would put further upward pressure on the price.
Many new producers have been forced to close their production facilities, due to this business becoming increasingly difficult because of tough competition and slim margins.
Demand from the food and technical industry has increased and new technical customers have come on the market. Current export volumes are between 20,000-30,000 MT per month, which has increased from the lows of 15,000 – 20,000 MT in 2010. Demand from the oil drilling and hydraulic fracturing industry in Russia and U.S.A has increased, which could be the result of the prices of crude oil remaining range bound.
The price for Guar Gum is predicted to increase. The first round of rains have been delayed (against the IMD’s estimations), putting upward pressure on the price. New Guar crops will start to be sown after the first round of rains, however, the Guar growing regions in Rajasthan have currently experienced deficient rainfall.
We are awaiting More accurate figures to be released regarding the quantity of Guar crops and whether it will be sufficient to meet the projected demand.