Guar firm on lower acreage, delayed monsoon

Fundamental Analysis

Guar futures declined by almost 3% in the initial days of the last on the MET department’s report that the monsoon has advanced into entire Rajasthan. However, prices recovered towards the week end as overall sentiments remain strong due to prediction of below normal monsoon in the monsoon season June-September 2009.

Sowing of Guari, which normally takes place between 15th of May and continues till Mid June has been delayed this year. Also, drastic fall in acreage under Guari has been witnessed across North Rajasthan.

Also, it expected that area under Guar might decline in the current season due to shift in acreage to other remunerative crops like Cotton, Moong etc.

Technical Analysis

Guar prices (NCDEX August) settled at Rs. 1,852 per qtl, higher as compared to the Friday’s close of Rs. 1,839.

RSI is at 58 and is moving sideways. Prices closed above its 5 days 20 days SMA and 65 days SMA indicating an up trend.

Outlook

Guar prices are expected to remain firm on below average monsoon forecast and expected fall in acreage in the upcoming sowing season. Guar futures will take some corrections as prices have surged in the last 3-4 sessions. Overall trend in Guar remains positive due to lower sowing acreage and lower stocks. Any significant decline in the prices should be treated as a good buying opportunity due to strong fundamentals. Expect prices to trade in the range of Rs. 1800-1890 in the current week (August contract).

Courtesy: Angel Commodities

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