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.