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.

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.