Fundamental Analysis In the last week, Guar prices had shown some signs of recovery in the physical markets due to improved demand at lower levels. Futures also recovered by almost Rs. 150 (10%) per qtl in the previous week.
The demand for Guar gum which is normally at its peak during the month of December every year did not picked up in the current crop season due to economic slowdown.
However, now, when the Guar seed and gum prices have dipped to its 3 years low, the exporters and millers have started stocking Guar seed and Guar gum on expectations that the prices could recover once the overseas demand pick up.
Also, Harvesting of Guar is completed in December and almost 65% of crop has arrived in the markets. Stockists are holding the rest 35% of the crop. At present the supplies are very less as stockists are not releasing the stocks at such lower levels.
Technical Analysis Guar prices (NCDEX March 09 Contract) settled at Rs. 1606 per qtl against the previous day’s close of Rs. 1583 per qtl.
RSI is at 69.45 is moving towards overbought region. Prices closed below its 65 days SMA but above its 5 days SMA and 20 days and indicating a sideways to up trend.
NCDEX March Guar seed futures are having strong resistance at 1602 levels; break of this level would take prices further upward towards 1635 levels :
Outlook Improved demand for Guar gum at lower price levels may keep Guar futures firm in the intraday. Firmness in soy meal prices is also increasing the attractiveness of guar byproducts as a cattle feed. Good demand for byproducts i.e. Churi and Korma are keeping millers interested in processing guar. Thus, in the short term (2 weeks), we expect Guar prices to remain firm due to good demand and comparatively lower supplies. However, in the medium to long term (Feb), trend in Guar complex would depend on the overseas demand from US and China.
Courtesy: Angel Commodities
