Guar trend remains positive on poor stock

Fundamental Analysis

Guar futures rose sharply on Wednesday on the reports of drop in acreage under Guar due to a poor monsoon in Northwest India where most of the Guar crop is grown.

Sowing of Guar has started across Rajasthan; however, the pace is very slow. According to the local traders and farmers, only 25-30% sowing is done till date against the normal 60-65%.

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

Also, MET department has predicted that the monsoon in the Northwest part of India (which is the main Guar belt) is only 83% which will affect the output of guar in the coming season.

Technical Analysis

Guar prices (NCDEX August) settled at Rs. 1,976 per qtl, higher as compared to Tuesday’s close of Rs. 1,954.

RSI is at 77 and towards overbought region. 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 in the short term on below average monsoon forecast and expected fall in acreage in the upcoming sowing season. 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. 1850-1990 in the short term (August contract).

Courtesy: Angel Commodities

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