Polypro IndoPak Guar Market Report 6-14-2017

The monsoon continues to advance as per the historic norm. Rainfall in some guar areas will help prepare the soil for planting.

Markets are seeking equilibrium. Speculative guar markets (paper) have firmed slightly in reaction to premium prices in the physical markets.

Please balance our comments with others.

Polypro IndoPak Guar Market Report 6-1-2017

The highly speculative Indian guar market is relaxed on news of the monsoon arrival at the southern state of Kerala. We anticipate the Pakistani market will lag but eventually follow India.  As you may recall, the direction of the Indian market is strongly influenced by the NCDEX (paper / leveraged trades).  But the physical market (farmer / stockists) eventually needs to follow for the paper market to hold. Physical supply has tightened up.

There are pre monsoon rains in some of the guar areas. These are welcome and good for conditioning the soil. The next symbolic date for the monsoon advancement is June 10 over Mumbai (the financial center of India). Thereafter, the industry will take its strongest weather cues on the following monsoon timeline coupled with actual rainfall over the guar areas. June 15 – reach the southern edge of Indian guar areas and July 1 – reaching Jodhpur the center of the guar areas and July 15 – reaching the western edge.

The AccuWeather reports will start next week and mark the 10th anniversary. Polypro contracts with AccuWeather to prepare a weekly forecast and recap of weather events over the major guar growing regions.

Polypro IndoPak Guar Gum Market Report 5-4-2017

On the IndoPak supply side, raw material remains tight but plants are reporting a slowdown in fresh orders for the O&G frac industry.

Please click on the below link to review guar gum import data for the period of January 2017 – April 2017.  On the average, for the past few years only 3,000 metric tons per month is related to non O&G frac applications. i.e., food (pet food), mining, etc…

I am of the opinion that the jump in March / April imports are not entirely related to an increase in down hole consumption. Rather, US frac buyers doubled up on their orders and manufacturers pushed extra shipments out the door prior to their March 31 fiscal year end and ocean rate hikes.  The IndoPak raw material and Houston Frac markets are somewhat relaxed with the decline in WTI oil price.  We will continue to watch the frac guar import trend and keep you updated.

Please balance our comments with others.

guar gum import data for the period of January 2017 April 2017

Polypro IndoPak Guar Gum Market Report 5-17-2017

Key weather related dates that can influence the guar gum market undertone are June 1 and June 10. The first is the historical onset date of the monsoon over the southern state of Kerala. The second is the arrival in Mumbai, the financial center of India.

Other important monsoon benchmark dates are June 15 (southern edge of Indian guar area), July 1 (Jodhpur), and July 15 (eastern edge of Pakistani growing area). May and June are the time of pre-planting rains. July is pre-planting rain and/or monsoon planting rains. The latest planting date is early-mid August.

The market will continue to watch the forecast and actual demand and/or weather events for direction.

Please balance my comments and opinions with others.

Forecast of the Onset Date of Southwest Monsoon – 2017 over Kerala

Polypro Guar Market Report 10-25-16

IndoPak guar crops are progressing and require dry weather through harvest. The monsoon has withdrawn from the guar growing areas. New seed is arriving from the northern growing areas of India and expected to build momentum in Nov/ Dec. Stockists, traders, and manufacturers are purchasing new seed. Price is stable.

It does not appear we will see substantial price moves for the foreseeable future all other things being equal. Guar is one of the cheapest agro commodities and thanks to the past US O&G frac boom it is still viewed as a sure payoff any day now. New crop and carryover stocks are abundant but in relatively strong hands (farmer, stockist and manufacturer) and as a whole are under little financial pressure to liquidate on a large scale. All of which is favorable to the supply side to increase price. Unfortunately for the supply side, world demand is stagnate and US O&G is far less reckless in their purchasing decisions. In addition, the downturn in the US O&G industry has resulted in fewer wells using water gels (guar based) and more “slick water” (ionic polyacrylamide based) frac systems.

Recent crop estimates are in the range of 8-10 lac bags seed (0.8-1.0 million metric ton seed) ex India. One million metric ton of seed translates to a conservative 250,000 metric ton of split/power. Worldwide export statistics ex India for powder/split total 257,000 metric ton. Internal consumption for India is estimated at 20,000 mts annually. In other words,  the new crop is expected to meet 72-90 percent for the forecasted demand expecting that US O&G remains anemic. Carry over stock is estimated at an additional 250,000 metric ton of split/power. An additional 250,000 metric ton of split/power from carry over would increase supply to 162 percent of the forecasted demand. (Note: some are estimating carry over as high as 375,000-500,000 metric ton of split/power but I am not a believer). Pakistan supply and demand zero each other out and was excluded for ease of supply/demand explanation.

However, given what we know today and looking to the crystal ball a down side of $0.10/lb and upside of $0.15/lb for sustained periods are likely the extremes and will require a combination of events. The combination of a larger than expected new crop, decreased demand especially US O&G, positive weather report for next season, summer doldrums, better returns in other agro products, increase inventory at the consumer level and the like can contribute to downward pressure. Conversely, the combination of a smaller crop, increase in US O&G, negative weather / farmer outlook for next season, substantial decline in carry over estimate, declining inventory at the consumer level and the like can contribute to upward pressure.

Polypro IndoPak Guar Market Report 9-19-16

In follow up to our last report, the crop areas planted in August (mainly western Rajasthan and adjoining areas in Pakistan) needs rain in the next 1-2 weeks (sooner the better). The forecast for dry weather has stimulated a bullish sentiment. Stockists and speculators are controlling the market and planning their moves base on weather developments. The extent of the second round of rainfall and international market response will probably be the major factors influencing the next price trend.  US frac demand remains subdued.

IndoPak Guar Market Report 9-6-16

Reports note that the standing guar crop is progressing well. As with all years and excluding the irrigated areas the bulk of the guar crop is planted in stages depending on the initial rainfall. Ideally, the crop as a whole now needs cycles of 1-2 weeks of relatively drier weather followed by periods of widespread rain to promote a healthy yield. Speculators and stockists are reported to be active.

Polypro IndoPak Guar Market Report 8-8-16

As per previous guar market reports, planting is progressing in the main areas. Some areas like western Rajasthan (India) and Sindh (Pakistan) are just receiving the planting rains and sowing  is expected on commence shortly. Early reports suggest normal planting in Pakistan but an estimated 40-60% reduction in some areas of India when compared to last year.  Naturally, the new guar crop needs favorable weather through harvest to see matching yields.

On the surface the reduction appears alarming, but 1)the largest area (Rajasthan) is expected to be normal planting and 2) if yield from the last crop was anywhere close to 2.38 million metric tons of seed as per the attached Nielsen report then a 50% reduction will still result in a “normal” size crop based on long term averages.  Guar crop estimates are always a little sketchy, but taking the report at face value the 2.38 million metric tons of guar seed is the largest guar crop in history and capable of producing  almost 600,000 metric ton of split / powder. i.e., two year supply at the current demand level which includes anemic demand from USA Frac. However, it has been my experience that guar seed has a way of disappearing over time.  The methodology to estimate planted acreage and yield is weak. The methodology to count bags of guar seed arriving to market at the time of harvest and extrapolating the crop size is only marginally better.  India “guar” export statistics (consumption) are inconsistent.

We would expect that weather, demand and speculation will keep the markets in an erratic mood for the next few months. It would appear that the large supply of seed and relatively weak demand will help keep price movements in check.

Polypro IndoPak Guar Market Report 7-5-16

The Monsoon continues to advance over the guar areas and rain is reported and forecasted for the coming weeks. The market reports that the combination of relatively early monsoon rains and persistently low guar seed prices are supporting the farmers desire to decrease guar acreage in favor of better priced crops like pulses, cotton, oilseeds, etc…  Some guestimates put the decrease at 50%. The IndoPak markets opened the week with spot and forward guar positions trading at a premium over last week. At this early stage, believe it is nothing more than wishful thinking as traders are trying to promote the expectation of higher guar seed prices next year.

Polypro IndoPak Guar Market Update

IndoPak weather reports remain favorable for the guar areas.

As per the IMD today, “Conditions are becoming favorable for further advance of southwest monsoon in some more parts of north Arabian sea, Gujarat, East Rajasthan, remaining parts of Himachal Pradesh, Uttarakhand, West Madhya Pradesh, Uttar Pradesh and most parts of Punjab & Haryana, entire Chandigarh & Delhi and some parts of West Rajasthan during next 3 days.” (Bold print are guar areas.)