Guar sentiments were determined mainly by the weather factor. The months of June and July were critical as the sowing activities start in growing areas in Rajasthan after the onset of monsoon. Monsoon got delayed in the state and there were reports of deficiency also.

This led to apprehensions of a fall in production this year due to late sowing and a fall in sowing area. The sowing are in Rajasthan is reportedly down by ~9­10% as per reports. A high deficiency in rains has been reported in the growing areas. Better rains in the other growing state of Haryana have however created possibilities of improved production there.

But Rajasthan being the prominent growing area, possibilities of an overall fall in production created a bullish sentiment. Export demand for Guargum remained moderately good and that support the prices further.

The coming month sentiments would again depend on the rainfall activities ­mainly in Rajasthan. Towards the end of July, improved rainfall activities in Rajasthan had created a bearish impact on the prices. Reports of farmers switching over to other crops like Moong and Moth are already affecting the sowing area prospects for this crop.

But rains in coming weeks may affect the market sentiments by temporarily pulling down the prices. But traders expect that with the erratic weather continuing to prevail in Rajasthan, short term trend may fluctuate with monsoon progress but long term trend can be expected to remain bullish if more fall in production is reported for the commodity this year also as was the case last year.

It needs to be noted that the carryover stock that was high during the beginning of the year has also come down. So a fall in production could lead to shortage of Guar for exports and a low carryover stock may further aggravate the problem. Moderate export from China and US are there.

The exports however are reportedly getting affected at the higher levels. A rise in Crude Oil prices could increase export demand for guargum as that is used in fracturing of oil and gas formation.

Firmness in Dollar vs Re could impact the export demand positively. Demand for churi and korma, the by­products generally falls during monsoon season and this can have some bearish impact on the prices.

The fallen rates seen in mid­June are considered very low. Underlying tone remains positive from a medium term point of view though short term sentiments would be affected by the weather aspects and one cannot rule out some corrections if monsoon reports improve.

Courtesy: Religare Commodities

Get Trading Tips that suits your profile

Post your comment  (0)

Connect:

Post to Twitter

Post to Facebook