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
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.