In­dian Guar Gum on a High as US Steps Up Drilling

Price of guar gum has moved up 8% since Novem­ber and in­dus­try ex­ec­u­tives feel ex­ports will rise 25% to 3.25 lakh tonnes

The Economic Times - - Finance & Commodities - Su­tanuka.Ghosal @times­

Kolkata: US Pres­i­dent Don­ald Trump’s move to en­cour­age oil drilling in the US has given a boost to the In­dian guar gum in­dus­try, which has been lan­guish­ing for two years. Price of guar gum has moved up 8% since Novem­ber and in­dus­try ex­ec­u­tives feel ex­ports will rise 25% to 3.25 lakh tonnes this fis­cal.

“Re­vival of oil drilling ac­tiv­ity in North Amer­ica has re­sulted in ex­ports mov­ing up. Also, Opec’s de­ci­sion to cut crude oil pro­duc­tion has added mo­men­tum to guar gum ex­ports from In­dia,” Ra­jesh Ke­dia, di­rec­tor, Jai Bharat Gum & Chem­i­cals told ET.

Guar gum price has risen to .₹ 67 per kg from .₹ 62 per kg in early Novem­ber. Last year, guar pro­duc­tion fell as farm­ers shifted to other crops like pulses for bet­ter re­turns. Since crude oil prices had dropped dras­ti­cally since 2015, the de­mand for guar gum had dropped in North Amer­ica.

In­dus­try ex­ec­u­tives said acreage of guar seed had dropped 27% dur­ing the 2016 kharif sea­son in com­par­i­son to the 2015 sea­son. Pro­duc­tion of guar seed in 2016 was around 16-17 lakh tonnes.

Ke­dia said there was huge stock in the pipe­line, which forced farm­ers to cut pro­duc­tion in 2016. “Weather fore­cast­ers have in­di­cated that El Nino might make a come­back in 2017. If that hap­pens, then it will have an im­pact on the crop size

and prices may ap­pre­ci­ate. How­ever, we have to wait to see how the mon­soon be­haves this year,” he added. Guar gum de­mand in the sec­ond

half of FY17 has gone up 35% in com­par­i­son to the first half. “If this trend con­tin­ues then ex­port of guar gum in FY18 can go up to 4 lakh tonnes,” an­a­lysts said.

Five years ago, prices of guar gum reached dizzy­ing heights as US oil ex­plor­ers started stock­ing it up fear­ing a drought in In­dia.

Prices went up to as high as $27,000 (more than .₹ 16 lakh) a tonne in May 2012.

In­dia is a lead­ing ex­porter of guar gum, com­mand­ing about 80% of global pro­duc­tion, fol­lowed by Pak­istan. Guar gum is de­rived from guar seeds (clus­ter beans), a legume crop that grows in semi-arid re­gions of Ra­jasthan, Gu­jarat and Haryana.

Drilling com­pa­nies use it to thicken wa­ter that is mixed with sand and pumped through shale rock cracks to ex­tract gas. It is also used as thick­en­ing agent in prod­ucts such as ice-cream, bread, pasta, sausages and pas­tries.

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