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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!

IMD’s 2019 Southwest Monsoon Update & Impact on Guar Market

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Yesterday the Indian Meteorological Department (IMD) released its first Long Range Forecast of the 2019 Southwest Monsoon. The summary is as under:

a) Southwest monsoon seasonal (June to September) rainfall over the country as a whole is likely to be near normal

b) Quantitatively, the monsoon seasonal (June to September) rainfall is likely to be 96% of the Long Period Average (LPA) with a model error of ± 5%. The LPA of the season rainfall over the country as a whole for the period 1951-2000 is 89 cm

c) Weak El Niño conditions are likely to prevail during the monsoon season with reduced intensity in the later part of the season.

The sea surface temperature (SST) conditions over the Pacific (El Niño/La Niña) and Indian Oceans (Indian Ocean Dipole-IOD) which are known to have strong influence on Indian monsoon are being continuously monitored. Overall, the country is expected to have well distributed rainfall scenario during the 2019 monsoon season, which will be beneficial to farmers in the country during the ensuing kharif season

IMD will issue the second stage Monsoon-2019 Forecast during the first week of Jun-19.

As IMD expects monsoons to be near-normal, Guar Seed/Splits prices have declined today and so it is a good opportunity to cover any Guar Gum requirements that you may have for the next couple of months.

The complete IMD forecast can be found HERE

 

Indian Southwest Monsoon 2019 Update

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As is well known, the Indian Southwest Monsoon plays a very important role in the development of the annual Guar crop here in India. It is therefore important to closely monitor the onset and progress of the monsoon and to that end we give below details of the first forecast for the Indian SW Monsoon of 2019.

Skymet, a weather forecasting and agriculture risk solutions company from the Indian private sector, released yesterday its Monsoon forecast for 2019. It expects the upcoming Monsoon to be ‘below normal’ to the tune of 93% (with an error margin of +/-4%) of the long period average (LPA) of 887 mm for the four-month period from June to September. In terms of geographical risk, Skymet expects that East India along with major portion of Central India is likely to be at a higher risk of being rain deficient, especially during the first half of the season. The onset month of June is going to have a very sluggish start and deficit rains are likely to spill into July. Second half of the season would see better rainfall wherein August is expected to be a shade better than September, but both the months would manage to see normal rains.

According to Skymet, Monsoon probabilities for Jun-Jul-Aug-Sep are:

  • 0% chance of excess rainfall
  • 0% chance of above normal rainfall
  • 30% chance of normal rainfall
  • 55% chance of below normal rainfall
  • 15% chance of drought

Premcem’s inference about the impact on the Guar Crop for 2019:

  • Firstly the geographical areas mentioned above, East India and Central India, where Skymet expects a higher risk of deficient rains, are not Guar growing areas
  • Secondly, although the onset on the monsoon is going to be sluggish and deficient, it is expected that the second half of the season, August and September, would see normal rains. And as Guar is usually planted later in the season, we feel that the adverse conditions in the first half of the season will not have an adverse impact on the Guar crop
  • Lastly, if the onset and progress of the monsoon, in the areas that grow Guar and some other competing crops, is significantly delayed, this might be to Guar’s advantage as it has a short crop cycle and so farmers would prefer to sow Guar as opposed to other crops.

So in a nutshell, there is no cause for major worry and customers can look to cover their requirements for the next couple of months at this stage. The next important forecast to watch out for would be the one from the Indian Meteorological Department.

To download Skyment’s Monsoon 2019 Forecast PPT, click HERE

Monsoon progressing well, Guar prices stable for now

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The Indian Southwest Monsoon has been progressing well this year.

Due to the significant decline in prices for Guar seeds/splits, and also due to the significant decline in Guar Gum export from India, the total area that has been brought under Guar cultivation this year has also declined significantly and which be seen below:

Rajasthan  – Area covered in Hectares (as on 18-Aug-16)
5 year avg. area for year ending 2014 Area sown by 20-Aug-15 Area sown till date % as compared to same period of 2015 % as compared to the 5 year avg. area
4,060,000 3,918,100 2,838,500 72.45% 69.91%
Gujarat – Area covered in Hectares (as on 22-Aug-16)
3 year avg. area Area sown by 20-Aug-15 Area sown till date % as compared to 2015 % as compared to the 3 year avg. area
378,800 263,800 119,500 45.30% 31.55%

Haryana is also an important state for Guar cultivation but the latest figures are not available from the state government. However based on market sources, the area brought under Guar cultivation in Haryana this year is 50% as that compared to last year.

However even after this significant decline in Guar cultivation, the total Guar seed output expected this year, plus the carry-over from the 2015 crop, should be more than sufficient to meet demand. All this info is already known to all the market players and we believe the same has already been factored into the current prices.

Moving forward, unless there is a sharp drop in crude oil price and/or a sharp drop in Guar Gum exports, we do not expect Guar prices to decline significantly in the near term.

However:

  • If the crude oil price increases significantly from the current levels or
  • If Rajasthan, which is by far the most important Guar growing state, does not get a second round of rains in about 3 weeks

then it is likely that Guar prices will also start moving upwards