iGrain India - The guar gum market is experiencing some interesting shifts due to a combination of domestic and international factors. Here’s a summary of the situation:
- After a period of price increases, guar gum prices have softened by about Rs 1,000 per quintal in Jodhpur and Ahmedabad, with current prices ranging between Rs 10,400-10,500 per quintal, down from earlier levels of Rs 11,700-11,800.
- Similarly, guar seed prices have dropped by Rs 200 to around Rs 5,200-5,250 per quintal.
- This price softening is largely attributed to weak global demand and an influx of new supply into the market.
- While demand from domestic millers, processors, and stockists has been sluggish, it’s expected to pick up as prices adjust to more competitive levels. This could help stabilize or even increase prices in the short term as domestic consumption ramps up.
- Demand for guar gum in key global markets, including the U.S., Germany, France, Russia, and Italy, had been weak but is now expected to strengthen, especially as the holiday season approaches. Historically, European demand for guar gum increases around Christmas, and this year, the same trend is anticipated.
- Despite weaker demand earlier in the year, there’s hope that the market will rebound as prices have come down, and international buyers might return to purchase at more favorable levels.
- Export performance for guar gum from India showed an improvement in the first half of FY 2024, with shipments rising to 2.27 lakh tonnes from 2.16 lakh tonnes during the same period last year. This suggests that, despite weak demand earlier, global buyers are still purchasing Indian guar gum, which might contribute to a future price recovery.
- The sowing area for guar in Rajasthan and Gujarat decreased slightly in the 2024 Kharif season, which could lead to tighter supply conditions in the coming months. Rajasthan remains the dominant producer of guar in India, accounting for 70-75% of total production, while Gujarat and Haryana also contribute significantly.
- A slight reduction in acreage could limit the availability of guar seed, which may eventually affect guar gum production, particularly if demand picks up.
- The major producing states of Rajasthan, Gujarat, and Haryana are seeing substantial inflows of new guar goods. However, the demand from processors and traders does not seem to match this inflow, contributing to price volatility.
- Guar gum futures have also seen some weakness, reflecting uncertainty in the market.
- Given the expected increase in global demand, particularly in Europe during the festive season, prices for guar gum could firm up in the near term. However, the market will need to balance the inflow of new supply with the returning demand to ensure a stable price environment. If the current trend of increased exports continues and global demand strengthens, guar gum prices may regain strength in the coming months.