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.