After the usual ups and downs Guar prices have lowered again in recent days.
Meanwhile, prices have reached a level which was unforeseeable a few months ago. Only the weak Euro prevents prices in the range of EUR 1 .- per kg. This is a dramatic swing considering the EUR 16 -18.- / kg price range at the peak of the guar boom in 2012/2013.
As long as the crude oil price remains at the current level, oil and gas exploration by the fracking method is reduced. Fracking is economical only at crude oil price levels at around USD 70.- per barrel. The lower need for guar has hit the Indian farmers and producers to a great extent. While farmers still can switch to other agricultural products, the Guar gum producers are faced with big underutilized capacities, which were built up during the peak time period.
The demand of the food industry has increased again in recent months. During the last few days larger amounts have been covered for the demand in 2016.
We have noticed recipe changes and enlarged re-useage of guar compared to alternative hydrocolloids selected when prices had become inacceptable.
We expect good supply of raw material after the Diwali holidays in India. However, speculators and big farmers are actively trying to stabilize the price level to avoid any further decrease.
Despite the lower demand from the technical sector and the fairly good harvest we do not see much room for further price reductions.
Taking into account the currency exchange rates, Guar gum is currently close to the level before the boom started, and this level was relatively stable over many years.
Therefore, we recommend to cover requirements for 2016.
We further observe the market on-site and we will keep you up to date.