What to Expect From the Guar Gum Business in the Year 2018 – 19

In the last three years, the guar gum has been under pressure from major factors of production and marketing that had a heavy effect on the entire supply chain. These factors included poor production, poor demand and poor crude prices. There has been a good sign of recovery in the period 2016-2017, as there was witnessed an approximately 30% increase in the prices. This trend is expected to continue well into 2018. According to data from several physical markets, the sentiment has been fairly neutral with most markets closing the day at the same prices of guar seed or at slightly lower prices. In the market of hanumangarh for example,there was no absolute change in prices of the guar seed loose by the end of day of January 29th trading. The prices of guar seed in the market of Nohar also remained the same.

Cultivation Area
By the mid of the year 2017, it is estimated that the total cultivated area was in the rain fed zones and the productivity per hectare estimated at 200 kilograms of the powder per hectare. This was considered much lower than expected and also coming from a lower cultivated area as compared to the year 2016. Rajasthan and Gujarat are the two major producers of the guar seed and low planting and production acreage was reported. There was an approximately 10% drop in the production acreage which ultimately translate to reduced supply.

Poor crop performance
It is also noteworthy that the prevailing climatic conditions did not quite favor guar production. It has been noted that areas with irrigated crops have experienced better production and the recorded weight of seed is also very good. This translates to better recovery of the guar splits from the guar seeds.

Demand versus supply
With the perceived reduced production and increasing USA shale gas output, it is expected that there will be a generally positive trend in prices of the product. The decline in the prices towards the end of the year 2017was attributed to higher carry forward stocks by both traders and farmers.

There has been rapid recovery in the crude oil prices and advancements in technology used in shale gas production has seen many of the oil rigs come back to full production in the united states and the world. This spells good times for guar gum powder producers in the year 2018 and going forward. The exports of the fast hydrsesation guar gum powder to Norway were also noted to have increased by up to 52 % which is a good indicator of the market direction.

Future Outlook
There has been a continuous average growth rate in the guar gum powder demand of approximately 8.8% per annum and this trend is bound to continue. Increasing research and development activities has led to more and more applications of the guar gum powder being discovered every day, the future looks good for the guar producers and the value chain will benefit.

Written by Ajit Patel

This article has been posted by Ajit Patel.