Polypro IndoPak Guar Gum Market Report – January 18, 2018

 

In follow up to past reports, guar prices continue to climb and the IndoPak guar markets remain strong.

Just a few weeks ago export demand for food and O&G guar was reported as normal and the size of the new crop continues to be advertised as expected and possibly down 10 percent. Since June 2016 the USA O&G Rig counts remained flat and in the range of 907-958 (last week at 939). Interestingly, the volume of seed arrivals in India are up 12.5% when comparing the first 15 weeks of the seasons. As you may recall, the sudden drop off in 2016 was attributed to liquidity issues related to the demonization of 500 and 1000 Rupee notes. (seed arrivals 2016 v 2017.1-17-18)

Speculation on the future is the root cause of the price increase to the raw material (seed/split). Seed supply is tight as manufacturers compete against stockists for available seed/split. The most recent reports indicate modest export demand in the face of higher prices.

Please balance our comments with others.

Polypro IndoPak Guar Gum Market Report – December 19, 2017

 

Prices remain firm.

Three sources report seed arrivals as “25,000”, “30,000- 35,000” and “30,000-40,000” bags per day over the past week.    As you may recall, seed arrivals from the previous week as “32,000”, “around 40,000” and “40,000-50,000” bags per day.  It is reported that the decline is mainly due to winter season and normal decrease in arrival during this period. Some manufacturers continue to report that the new crop might not be as large as they originally forecasted.  So far the revised numbers are down ~10 percent from the original estimate.

The U.S. guar imports for November totaled ~15,200 metric ton.  To recap, the previous 10 months (Jan-Oct) totaled 218,000 metric ton to average 21,800 metric ton per month.

Please balance our comments with others.

Polypro IndoPak Guar Gum Market Report – December 8, 2017

Prices firmed slightly since the last report.

At this point, it appears that NCDEX speculation (paper trading) is the root cause of the initial price increase. Typical export demand is reported and current market mood indicates that firm pricing is likely to last through the New Year. Seed arrivals from the past week are reported by three sources as “32,000”, “around 40,000” and “40,000-50,000” bags per day. The three sources reported similar arrivals last week.

Please balance our comments with others.

Polypro IndoPak Guar Gum Market Report – November 30, 2017

 

Harvest of the IndoPak guar crop is progressing nicely.

The U.S. guar imports were 20,500 metric ton in October.  To recap, Jan-Sept imports totaled 197,000 metric ton to average 21,900. Jan was the low month at 13,400 and May the high at 31,200.

Pricing has firmed since the last report. At this point, it appears that seed arrival is not the root cause of the price increase.

Guar seed arrivals in India are graphed in the attached. (India guar seed) Looking at the first 5 weeks, 2016 arrivals averaged 45,000 bags per day vs 2017 average of 49,000 bags.  The arrivals represent guar seed that passes through the physical trading market yard. Guar manufacturers, stockists, speculators, etc…have agents located at their preferred market yard. For example, if there are 50 major market yards spread over the whole guar growing area, a manufacturer may have an agent in just 5-10. Those agents keep in contact with the remaining yards and provide daily feedback on arrivals, quality, price and competition. The reliability of the seed arrival count is suspect but it is the practice in place. Some manufacturer’s report higher arrivals and some lower. The graph represents one manufacturer. As you may recall, the sudden drop off in 2016 was attributed to liquidity issues related to the demonization of 500 and 1000 Rupee notes.

The first 100 days of the season are generally the peak arrival period.  You may recall the old rule of thumb, that 80% of the crop would trade hands in the first 100 days. Many years ago it was revised to 50% as wealth increased on the farm. If the 50% rule holds, a 9 million bag crop will trade an average of 45,000 bags per day for the first 100 days. We are averaging 48,750 bags per day for the first 56 days.

Some manufacturers are floating the idea that the new crop might not be as large as they originally forecasted.  So far the revised numbers are down ~10 percent from the original estimate.  The original estimates on the total amount of raw material (new crop and carryover) from India ranged from 17-23 million bags with consensus at 17-19 million bags. Worldwide export demand from India was 12 million bags or 300,000 metric tons of powder equivalent for 2016.  We forecasted that worldwide demand will likely hit 14 million bags for 2017 and 2018 demand looks like a repeat given O&G is forecasted to remain strong.

Please balance our comments with others.

Polypro IndoPak Guar Gum Market Report – October 30, 2017

The IndoPak guar crop is progressing nicely. DIWALI is over and trading markets have resumed to normal activities. Harvest is underway and will increase over the next month.  Dry conditions are needed and forecasted for the week.

Estimates on the total amount of raw material (new crop and carryover) from India continues to range from 17-23 million bags with consensus at 17-19 million bags. Worldwide export demand from India was 12 million bags or 300,000 metric tons of powder equivalent for 2016.  2017 demand was on track to reach 17 million bags (425,000 metric tons powder equivalent) based on the first 6 months of Agricultural and Processed Food Products Export Development Authority (APEDA) export statistics. However, August and September US import numbers on the attached graph reflect a decline. (USA import data is available before APEDA export data.)  As a result, worldwide demand will likely hit 14 million bags for 2017. 2018 demand looks like a repeat given O&G is forecasted to remain strong. (Graph – Jan 2015-Sept 2017 guar imports usa)

Pricing is more or less stable from the last report and continues to follow short term weather and demand/supply factors.  We don’t foresee a significant event on either the demand or supply side in the physical markets to support wild price fluctuations over the next 3 months.

Please balance our comments with others.

Polypro IndoPak Guar Gum Market Report – September 20, 2017

The IndoPak guar crops are progressing nicely. Pricing is more or less stable and following the short term weather / demand clues.

The favorable crop forecast for western Rajasthan should compensate for the mid-season flooding that damaged some areas. The initial new crop guesstimates are in the range of 8-10 million bags of seed from India with most leaning on the high side. The carryover from past seasons is reported at the equivalent of 9-13 million bags (most in the 9-11 range).

For 2016 the worldwide export demand from India was 12 million bags or 300,000 metric tons of powder. It appears that 2017 demand could reach 17 million bags (425,000 metric tons powder equivalent) based on the first 6 months of export statistics. Seed to powder yield of 25%. The increase is largely USA demand from O&G. The attached graph shows all USA imports by month against the Baker Hughes rig counts. Generally, non O&G applications are less than 5,000 metric tons per month in the USA. 2015-2107 Guar Imports USA/India Graph

O&G is forecasted to remain strong in 2018. The U.S. Energy Information Administration (EIA) forecasts “overall U.S. crude oil production will continue to grow in the coming months. EIA forecasts total U.S. crude oil production to average 9.3 million barrels per day for all of 2017 and 9.8 million b/d in 2018 which would mark the highest annual average production in U.S. history, surpassing the previous record of 9.6 million b/d set in 1970.  U.S. dry natural gas production is forecast to average 73.7 billion cubic feet per day (Bcf/d) in 2017, a 1.4 Bcf/d increase from the 2016 level. Natural gas production in 2018 is forecast to be 4.4 Bcf/d higher than the 2017 level.” Full September 2017 report can be found at https://www.eia.gov/outlooks/steo/pdf/steo_full.pdf

The supply ranges from 17-23 million bags with the consensus in the 17-19 million bag range.  India reported slow O&G business for the last couple of months and as a result forecasted demand for 2017/2018 could fall somewhere in the 14-17 million bag range.  Better crop numbers will be available in October after the physical field surveys. Likewise, in December we will have three more months of O&G data to better forecast 2018.

Please balance our comments with others.

Polypro IndoPak Guar Market Report – August 9,2017

IndoPak guar gum markets have firmed slightly over the past weeks. This is mainly on news of too much rain. i.e., flooding / saturation in some of the key guar growing regions of Gujarat and Rajasthan. Adjacent lands in Gujarat and Haryana are also important guar areas. Please click on this link to view the time lapse of rainfall in these areas.  http://dos.gov.in/flood-monitoring-using-scatsat-1-satellite.

It will take a few weeks to determine the next impact to the crop.

Please balance our comments with others.

Polypro IndoPak Guar Gum Market Report 7-10-2017

IndoPak guar markets have firmed slightly over the past weeks mainly on news of too much rain. i.e., flooding / saturation in some of the key guar areas. Please note the link for “key west Raj districts” as a point of reference to the guar areas. (key west Raj districts) Adjacent lands in Gujarat and Haryana are also important guar areas. The attached S/S shows weekly rainfall as a percentage of deviation from “normal” since June and the following link shows time lapse. http://dos.gov.in/flood-monitoring-using-scatsat-1-satellite.

(Weekly Rainfall – India)

It will take a few weeks to determine the next impact to the guar crop.

Please balance our comments with others.

Polypro IndoPak Guar Gum Market Report 7-6-2017

We are pleased to report widespread rain over much of the IndoPak guar growing areas. Sowing is underway in India and Pakistan is expected to follow shortly.

The forecast is favorable to promote continued planting across the guar areas.  Market tone is relaxed on the news yet raw material remains tight.

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.