Prices are at a season high, from the lows earlier this month. Acreage reduction and the late sowing of new crop has spurred speculative purchasing of Guar.
Frequent news that the late sown crop is being damaged due to a lack of rainfall after being sown and high day temperatures has increased speculator activity. The current crop requires one round of rain’s, especially in western Rajasthan otherwise, the crop output could decrease further.
India’s Department of Agriculture has released advance estimates of sowing, production, and yield of Guar seeds as decreasing by 25-30%. The farmers have now devoted more space to crops providing maximum profits.
Demand from the food and technical industries have remained stable.
Prices were lower at the beginning of September compared to August, however, prices have now increased to a season high. The current supply situation and the bad news of damaged crops have increased speculative buying.
There has been an increase in demand from the oil drilling industry. OPEC are due to hold an informal meeting with Russia at the end of September, fanning speculation that producers may agree on an output freeze to sure up oil prices.
A report released by Baker Hughes showed an increase in the amount of active U.S. oil rigs, in 10 of the last 11 weeks, to approximately 414, which is the longest streak since 2011. This has shown the resilience of the shale gas industry amid low oil prices.
The Department of Agriculture has confirmed fears that the Guar acreage will reduce, therefore if the demand remains the same, prices could increase. The outcome of OPEC’s meeting and the resilience of the shale industry could result in increased demand from this sector.