Market Fluctuations in Guar Gum Prices - A Comprehensive Overview for Exporters
Weak Industrial Demand
In previous report we were expecting that the prices of the guar gum are about to raise. But, the guar gum market has recently experienced notable fluctuations, primarily driven by weak industrial demand. These price changes have significant implications for exporters, particularly those involved in the trade of guar gum and its by-products.Current Price Decline in Guar Gum
In the last week, the price of guar gum in Jodhpur Mandi saw a considerable drop. The primary driver behind this decline was a decrease in industrial demand, which significantly impacted the market. Similarly, the price of guar also fell. This decline in price was observed despite a relatively stable crude oil market, where prices saw only a slight decrease. The weak demand from gum mills further contributed to the reduction in guar prices.Speculation and Sowing Area Decline
The price decline was further exacerbated by decreased speculative buying and a reduction in sowing areas for guar. Despite weak sowing areas in Rajasthan and Gujarat, guar futures in the National Commodity & Derivatives Exchange (NCDEX) for August dropped, while guar gum futures fell. The decline in the guar sowing area is particularly concerning. Guar is predominantly cultivated in Rajasthan, Gujarat, and Haryana. The recent price trends have discouraged farmers, leading to reports of a weakened sowing area in these states. This reduction in sowing area may have long-term effects on the market, limiting supply and affecting future prices.Reduced Exports
Guar gum is a significant export commodity for India, with key markets including the United States, Russia, Italy, Japan, and France. According to the Agricultural and Processed Food Products Export Development Authority (APEDA), guar gum exports from April to May 2023-2024 amounted to 65,332 tonnes. This represents a significant decrease compared to the 87,933 tonnes exported during the same period in the previous year. Despite the current downturn in prices, the export market remains a vital component of the guar gum industry.Conclusion
The recent decline in guar gum prices, driven by weak industrial demand and reduced speculative buying, has created challenges for the market. However, this downturn may be temporary. With reports of a reduction in sowing areas and the possibility of limited future supply, the market could stabilize or even see a rebound in prices.