Decline in Guar Gum production and high demand results in price hike of crude oil

07 December 2016

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India accounts for 80 per cent of the world’s production of guar, followed by Pakistan. Rajasthan is the leading producer, contributing 70 per cent of India’s production. Over 80 per cent of India’s guar products are exported, mainly to the US, Germany and China. Gujarat and Haryana are other main producing states. Jodhpur, Sri Ganganagar and Hanumangarh in Rajasthan are the major Guar trading markets.



  

Guar seed acreage in the states like Rajasthan, Haryana and Gujarat has dropped by 20%-25% in Kharif 2016 as compared to last year. Net cultivated area in Rajasthan under guar crop has declined from 32 Lakh hectares in 2015 to 22 Lakh hectares in 2016. Late sowing, decline in arrival rate of guar gum is expected to be the major cause behind price hike of guar in mandis. Prices of guar gum in Jodhpur Mandi are as follows:



  
Crude_Oil


Guar gum is used in oil well drilling, oil well stimulation, thickener and as suspending agent. Gum produced from guar seed can turn water into thick gel and is useful to keep pressure around drill well. In recent month the prices of crude oil has seen sharp increase from $30/barrel in Feb to $52/barrel in December 2016.



  
Crude_Oil



Increased crude oil price is expected to push oil drilling/frecking activities leading to higher demand of guar gum. We are faced with a situation when demand of guar gum is expected to increase and production of guar gum is expected to be low. This could trigger sharp increase in prices of guar and guar gum in near future.



  

  
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