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Guar – good rains, decent crop, weak demand, lower prices

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Guar Crop 2023 estimates/guesstimates

It is a bit early to give out the 2023 crop estimates but on the basis of initial info that has been gathered from the market we can give you the following figures:

  • Guar Seed 2023 crop estimate = 7.5 million bags of Guar Seed of 100 kg each = 210,000 MT of Guar Splits
  • Carryover (guesstimate) of Guar Seed and Guar Splits (equivalent quantity of Guar seed bags considered) = 12.5 million bags of Guar Seed of 100 kg each = 350,000 MT of Guar Splits

Indian Southwest Monsoon 2023

The monsoon has been good for the major Guar growing states of Rajasthan, Haryana and Gujarat (a far third). Please see the map below in which the cumulative rainfall received so far, in the important meteorological sub-divisions for the Guar crop, has been shown:

Source: IMD (click HERE to go to the IMD site)

Guar Gum demand

Guar Gum demand has been weak lately

Guar Splits prices

The combination of good rains, expectation of a decent size crop and weak demand have led to a decline in Guar Splits prices by around 10% over the past 3 weeks and we believe that this is a good opportunity to cover some volume for Q1 2024.

Hope all this info helps you in taking an informed decision about your purchases.

Lastly the picture associated with this post is of dried Guar pods from which the dried and hardened Guar Seeds are obtained for producing Guar Gum!

Oil rigs down, Guar prices down!

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Since our last Guar Market & Indian Southwest Monsoon Update dated 2-May-23, the IMD (Indian Meteorological Department) came out with an updated forecast on 26-May-23 wherein it is stated that “Region wise, the southwest monsoon seasonal rainfall is most likely to be below normal over Northwest India”. Northwest includes all the 3 Guar growing states of India – Rajasthan, Haryana and Gujarat.

To see IMD’s complete report pls visit
https://internal.imd.gov.in/press_release/20230526_pr_2353.pdf

Normally such a forecast would have resulted in an immediate and significant upswing in Guar splits prices. However on this occasion prices did not spike as Guar Gum demand has been quite weak for the last couple of months. Activity in the U.S. oil industry has certainly slowed down as can be made out from the Baker Hughes Rig Count report which came out yesterday and mentions that “U.S. Rig Count is down 15 from last week to 696 with oil rigs down 15 to 555, gas rigs unchanged at 137 and miscellaneous rigs unchanged at 4. U.S. Rig Count is down 31 rigs from last year’s count of 727 with oil rigs down 19, gas rigs down 14 and miscellaneous up 2”.

For your reference given below is our latest Guar Splits Price movement chart.

 

Guar sowing has somewhat begun in the irrigated areas of Haryana, but for the rain fed areas of Rajasthan sowing will only begin sometime in July (provided those areas receive at least a good first bout of rainfall). Apart from the below normal monsoon which might impact the Guar 2023 crop size, the crop size might also be impacted by farmers in certain areas choosing to raise crops, other than Guar, whose prices are more lucrative. But …. still early days to say anything with any level of certainty. So we will keep a close eye on the developments and will keep you posted.