IGI Logo

Highlights

Guarseed prices gained by 64.02% since January 2021 and today closed at 6410 up by 6% while Guargum skyrocketed by 80.26% in 2021 marking biggest gains in the last few years as driven by strong fundamentals to close at 10796 up by 6% today on NCDEX.

* Demand for Churi, Korma from the feed industry has increased due to record high prices of soyabean DOC and other DOC.

* As pandemic hits demand for protein intake increased sharply, which has triggered demand for korma which is a better source of protein than soy bean, and currently korma prices are cheaper compared with soyabean.

* With the global market recovering from the Covid and global vaccination rising demand from US & European nations is rising resulting in a good export of guar gum compared with last year. Only concern is shortage of containers and high freight, which can hinder exports if the situation doesn’t improve.

* Gum export demand is improving from the oil sector as U.S. production rose and drilling companies added rigs for the third week in a row, services company Baker Hughes said. The US production rose to 11.4mbpd in the most recent week, and drilling firms added more rigs for the third week in a row, as a recovery in oil prices prompted drillers to return to the well pad.

* Since last few year guarseed sowing witnessed sever fall resulting low production, and with continuous consumption had resulted in low carryover stocks of guar seed and Guar Gum.

* Prices gained due to the concerns about the kharif crop. Rainfall in western Rajasthan, including the districts of Bikaner, Badmer and Jaisalmer, has not been sufficient for the growth of the crop, which has led to concerns about the potential shortage in production.

* Prices getting support as sowing area has been dropping since the last two years and inventory has also fallen in 2019-2020 (5 Lakh tonnes approximately) versus 2017-2018 and 2018-2019 (around 9-10 lakh tonnes during these years).

* Production this year is expected to fall significantly below last year because of erratic monsoons and farmers shifting to other crops as they were unable to get good prices for the last two years. overall sowing area in Rajasthan is not more than 30-40 percent of previous year’s cropped area till date.

* Due to poor rainfall conditions in the current year, the crop condition in the guar growing area is currently poor, due to which the production of guar is expected to decrease by 20 to 25% from last year. All the belts of Guar have received 30 to 40% less rainfall.

* Prices rallied sharply on speculation that current Guar stock in the exchange's warehouse and carry forward stock will short in size as demand is improving and this year production will also drop. Also slowly demand from Guar processors are improving which were running at 50% capacity since long which will further impact on supply.

* Only concern in the market is a third wave of corona, there can be a sudden drop in demand one should keep booking profits from the current level in Guar and Gum. A committee of experts constituted under the NIDM has warned of an imminent third wave of Covid that could peak around October.

Guarseed

As per Daily chart, Guarseed Prices entered into overbought territory, hitting an RSI reading of 91.77. A bearish investor could look at Guar Seeds 91.77 RSI reading today as a sign that the recent heavy buying is in the process of exhausting itself, and begin to look for entry point opportunities on the sell side. While as per the above chart, one of the technical patterns that looks extremely attractive for Guarseed has been the ICHIMOKU pattern. As seen on the charts, the ‘Chikou Span’ (a line based on closing prices trailed backwards) has shown signs of coming out of the cloud pattern on the Daily timeframe. The Kijun sen had acted as a strong support zone for the Guarseed, this also indicates that the Guarseed could continue to move up higher, and with this recent ICHIMOKU cloud breakout the pace of rally, as well as the participation levels, could increase in the Guarseed. The importance of this pattern on the Daily chart is that in many cases we have witnessed commodity's go into a strong bull run for coming days and not some short-lived trends. Even on the short-term chart, a price volume breakout of a multi week consolidation was considered extremely positive. Such breakouts have a tendency to change the range for the commodity even from a near term view.

Guargum

As per Daily chart, Guargum Prices entered into overbought territory, hitting an RSI reading of 93.95. A bearish investor could look at Guargum's 93.95 RSI reading today as a sign that the recent heavy buying is in the process of exhausting itself, and begin to look for entry point opportunities on the sell side. While as per the above chart, one of the technical patterns that looks extremely attractive for Guargum has been the ICHIMOKU pattern. As seen on the charts, the ‘Chikou Span’ (a line based on closing prices trailed backwards) has shown signs of coming out of the cloud pattern on the Daily timeframe. The Kijun sen had acted as a strong support zone for the Guargum, this also indicates that the Guargum could continue to move up higher, and with this recent ICHIMOKU cloud breakout the pace of rally, as well as the participation levels, could increase in the Guargum. The importance of this pattern on the Daily chart is that in many cases we have witnessed commodity's go into a strong bull run for coming days and not some short-lived trends. Even on the short-term chart, a price volume breakout of a multi week consolidation was considered extremely positive. Such breakouts have a tendency to change the range for the commodity even from a near term view.

To Read Complete Report & Disclaimer Click Here

Views express by all participants are for information & academic purpose only. Kindly read disclaimer before referring below views. Click Here For Disclaimer