Low Pak prices, seed stock keep guar gum rangebound
Prices of guar gum on the futures markets have been trading in a more or less rangebound pattern over the past few weeks.
By Ram Sahgal, TNN |
MUMBAI: Prices of guar gum on the futures markets have been trading in a more or less rangebound pattern over the past few weeks. The reason, according to traders, is export demand has been slow to come by with prices of guar gum powder in Pakistan lower by Rs 600 per quintal at Rs 4,200.
Coupled with this is the fact that there are ample stocks of guar seed ��� the raw material for guar gum, used as a binding agent and industries such as drilling, paper and textiles ��� with both stockists and at the exchange levels, so exporters are willing to buy only as and when their stocks are depleted.
Around 21% of guar gum is derived from guar seed and this is further converted into powder. Three contracts of guar gum have been trading within a Rs 100-200 range since 20-30 days. The price of the near month contract was up a fifth of a per cent at Rs 4,877 per quintal on Wednesday, March was rangebound at Rs 4,950, while the benchmark April contract was down two-fifths of a per cent at Rs 5,031.
With low demand for the raw material, prices of guar seed have fallen from peak levels of Rs 2,100 in October-December to Rs 1,850 currently, says a Jodhpur based broker. He feels prices could fall further with limited demand and this could bring down the futures prices as well. Good supplies are expected up to March and these could push spot prices of guarseed down by Rs 100 over the next 15 days.
Guar seeds stock position on the NCDEX as of Tuesday was 21,627 tonnes, while that on the MCX was 8,683 tonnes. Apart from these, traders and stockists in Bikaner and Jodhpur have around 50,000 tonnes, says Sandeep Sabharwal at Sohanlal & Co.
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However, according to Sanjay Agrawal, proprietor, Agrawal Trading Co in Bikaner, continued supplies of guar seed over the past two months and exports for one month could see millers needing to replenish stocks and this in turn could raise the price of guar seed by Rs 100 over the next 15 days.Around 80% of guar gum is exported, while the rest is consumed domestically. Against last year���s production of 50 lakh bags of guar seed, domestic production accounted for 80 lakh bags this year. Pakistan���s production, on the other hand, has more than doubled from 7 lakh bags to 15 lakh bags this year.
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