Guar Seed Markets Are Likely To Surpass 2021 Highs
The guar seed could finally emerge from its long consolidation phase. The wait for guar seed has been long for growers and processors alike. In 2021, the demand situation improved after two years of range-bound markets. The commodity had traded in a range of 3700 to 4600 between 2019 and the first half of 2021.
In August 2021, the commodity broke through the 5000 barrier and remains above this level. In addition to reports of a fall in the net cropped area and robust use from the carryover stocks, there was strong demand for Indian guar gum (a processed form of guar seed). Since July 2021, India has been exporting around 25-30 thousand tons every month, according to trade sources.
By 2020, we were struggling to export only ten to twelve thousand tons per month. Because of better prices for pulses and oilseeds, the production in 2021 has fallen significantly compared to last year. Improving domestic and exports demand has resulted in a consistent decline in carry-over inventory.
The bullish momentum eased between November and December due to increase in the new season arrivals but year on year, the commodity is up roughly 53 percent.
Guar seed futures had experienced a consolidation phase for more than 2 years, trading within the 3700 and 4600 range. A comfortable breakout above 4600 was observed in August 2021 and the trend has been bullish, until now. The ending inventory is expected to fall by 20-25 percent year on year. The domestic and overseas consumption are likely to improve further in 2022. Hence there will be consistent utilization of the inventory in forthcoming months. The producing regions of North Rajasthan and Haryana did not receive adequate rain in June.
Additionally, the acreage had fallen drastically because of a shift in the planting interest towards oilseeds, cotton or pulses. These crops had provided impressive returns last year. The production declined by nearly 40-45 percent over last year. Overall, guar seed view is bullish for 2022, on expectations of fall in production, higher consumption, lower carry forward stocks versus last year.