Home Market Skymet, Opec have just given guar seed reasons to cheer

Skymet, Opec have just given guar seed reasons to cheer

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Any below-normal rain during sowing months of June and July could impact guar seed prices this year.

The prices are expected to receive support from lower acreage.

Guar seed is one of the major kharif commercial crops of Rajasthan, which produces around 80 per cent of the total domestic crop.

Guar seed and its derivative guar gum are mainly used in oil exploration industries.

Independent weather agency Skymet has predicted that India could face its third consecutive below-normal monsoon this season, with rainfall expected to be 93 per cent of the long-period average.

There is a 55 per cent probability of below-par monsoon this year, with the rain-busting El-Nino at play, according to Skymet. It saw only 30 per cent chance of normal rain during this years South-West monsoon.

Rainfall in the range of 96-104 per cent of the long-period average of 89 cm is considered normal while a range of 90-95 per cent of this average is considered below normal.

Production cut by OPEC and producer allies is a positive for guar gum demand in coming days. With the US getting ready to ramp up shell oil, guar gum finds itself in a sweet spot.

In our view, lower rainfall and increased demand of guar gum will prop up the prices, which could test Rs 4,600 per quintal.

Technical chart of Guar seed

(Source: investing.com)

Guar seed futures on NCDEX corrected from a high of Rs 4,870 in November last year to a low of Rs 4,092 in February 2019. It made a solid base around Rs 4,130Read More – Source