Fundamental Analysis

After gaining more than 10% during the last 2 weeks, Guar futures declined 2.65% on Wednesday due to favorable monsoon and thereby expectations of better crop in the coming season.

Export demand for Guar gum has declined. Also, lower domestic demand of Churi and Korma would provide support to the bears.

Better production estimates in 2010-11 due to adequate rainfall resulting in higher sowing acreage would pressurize the prices in the medium term (October onwards).

Sowing acreage increased about 100% in Haryana and Punjab in anticipation of better return as compared to other traditional crops

In the medium to long term (October onwards) prices will take cues from the stocks of Guar with the stockists, demand from the overseas buyers and the pace of arrivals of early sown Guar crop (Guari)

Technical Analysis

Prices on daily charts closed below its 10-days and its 20- days EMA, which indicates a bearish trend.

14-days RSI is at 41.25 and is moving sideways.

Outlook

Guar futures may extend its losses on Thursday on expectations of better output and subdued demand for Churi and Korma. In the Short term (till September), prices will depend on the demand from the overseas buyers which is currently at a slow pace. In the medium to long term (October onwards) prices will depend on the pace of arrivals of early sown Guar crop and stocks of Guar with the stockists.

Courtesy: Angel Commodities

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