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Guar gum prices likely to plummet on ‘huge’ crop

Seisun said he was placing a few friendly bets that prices will be down - at least for the next few months
Seisun said he was placing a few friendly bets that prices will be down - at least for the next few months

Hydrocolloids expert Dennis Seisun has just returned from his third annual visit to Jodhpur in India to check on the guar crop there, and reports “in a nutshell, a huge crop – larger than there’s ever been”.

Guar gum prices started to rocket in 2010 when demand spiked from the oilfield industry, which uses guar gum in the fracking process, causing prohibitively high prices for the food industry. Prices spiked at $20 to $25 a kilo.

This year, after overbuying from the oil sector, a good summer crop, and with significant carryover from the previous year, sales have gone down, said Seisun, founder of IMR International and publisher of the Quarterly Review of Hydrocolloids.

He told FoodNavigator that the crop this year is estimated at about 4m tonnes, compared to about 2m tonnes in an average year.

“I am making a few friendly bets that prices are going to be going down for the next three to six months,” he said, adding that there could be competition among processors to keep their plants running.

“Processing capacity has been extremely rapidly expanded, especially for the oilfield, and demand is coming back for the food sector, but this is pretty small anyway,” he said.

According to Seisun, there are currently about 2,000 tonnes of guar a day coming onto the marketplace, compared to the usual 1,000 to 1,300 tonnes.

By October this year, gum prices had fallen back to $3 a kilo, and with current guar supply, could fall further.

However, Seisun warned: “No one really knows how capable the local farmer is going to be at selling at these prices.”

He explained that some may decide to hold off bringing their guar to market until prices are higher, although what might happen in six months is anyone’s guess.

“Six months from now is when they start planting the new crop and if prices have gone down, farmers might go to other crops like cotton or soy, and we end up with the yo-yo effect – it could be the usual boom and bust cycle again.”

He added that the surge in demand for guar gum for the fracking sector may or may not last.

“Oil field demand itself will depend on how successful or unsuccessful the environmentalists are,” he said.

1 comment (Comments are now closed)

Guar gum Price

Thank for your nice analysis. Appreciated.
I am bit agreed with you but, as far Guar gum price is concern forget about the past. Presently farmers trader, brokers exporter everybody convinced that if it ones touched 30$ /kg it has meaning which is answered by trader and middle men’s and respective agricultural marketing regulation which may or may not check hording.
The price is normally monitored by four reasons. One is production which was good compared to last year. Second, middlemen hoarders they want to sell it higher margin. Third is processor who process guar seed and guar gum they also want it to sell on high price at global market. Forth is market demand which is driven by again oil company, pharma, sweets and others.
Part of the region where you visited jodhpur, the region is not known by cotton crop region it purely Bajra, Pulses, cores cereals and spices etc.
As far boom and burst is concern the cycle is longer 3-4 your periods. so farmer may not bring their crop to market

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Posted by Bajrang
11 December 2013 | 07h44

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